The crypto industry was a sea of red as Bitcoin, Toncoin, Dogecoin, and the majority of other cryptocurrency prices collapsed. Bitcoin dropped to $55,000, while Toncoin (TON) and Dogecoin (DOGE) fell to $6.62 and $0.094, respectively. Most altcoins, including Solana, Pepe, and Cardano, have also retreated significantly in the past few days.
Bitcoin double-top pattern
There are fundamental and technical reasons why the price of Bitcoin crashed hard this week. Technically, as shown above, this drop happened after the coin formed a giant double-top chart pattern on the daily chart.
The first smaller double-top pattern occurred between March and April at around $72,200, while the second occurred in June. Their necklines were $60,884 and $66,573, respectively.
Moreover, the neckline of the bigger double-top pattern was $56,525, which the coin has now broken, pointing to more downside. By measuring the size of the distance between the double top and the neckline, this sell-off will continue to about $44,000 in the near term. This view will be confirmed if the Bitcoin price drops below the key support at $50,000
The other risky technical aspect to watch is that Bitcoin (BTC) has now crashed below the 200-day moving average. This raises the possibility that the coin will form a death cross, which happens when the two moving averages cross.
Toncoin, Dogecoin, Shiba Inu, and other altcoins have all dropped as a result of the ongoing Bitcoin price action.
Weak fundamentals and asset sales
The recent poor technical performance coincided with more negative news for Bitcoin. Firstly, there are indications that the assets belonging to creditors of the failed Mt.Gox crypto exchange are going to be liquidated. These assets have begun to move to exchanges, suggesting that they are about to be sold.
Secondly, the German government has already started selling its Bitcoin holdings. Consequently, the amount of Bitcoin balances in exchanges has continued to rise in the past few days.
Bitcoin ETFs have not also received significant inflows in recent months, which increases the risk of low demand. Most importantly, the industry is lacking a major catalyst, similar to what we saw earlier this year. The first catalyst was the Securities Exchange Commission’s (SEC) approval of spot Bitcoin ETFs, followed by the Bitcoin halving.
The only major catalyst remaining is the acceptance of spot Ethereum ETFs. While this is good, analysts believe its impact will be more limited since it has already been priced in.
Additionally, there are indications that Joe Biden may be compelled to withdraw from the presidential race. If this occurs, it could pave the way for a younger candidate. In this scenario, there is a possibility that Trump, who is viewed positively by the crypto community, could lose the election.
