The Bitcoin price and the overall Crypto Market Cap (TOTALCAP) experienced a decline, forming lower highs in the recent session. KuCoin Token (KCS) faced challenges in closing above a crucial horizontal resistance zone. The cryptocurrency market cap had been on a rapid ascent since October, following an ascending support trend line. This bullish momentum reached its pinnacle on December 9, reaching a high of $1.63 trillion. However, a reversal ensued, with the crypto market witnessing a pronounced downturn on December 11.
What Factors Are Contributing to the Decline in the Crypto Market Today? Why Are Cryptocurrencies Experiencing a Negative Trend in Today’s Market?
Traders often turn to the Relative Strength Index (RSI) as a momentum indicator, gauging overbought or oversold conditions to inform their buying or selling decisions. Readings above 50, especially when in an upward trend, suggest a prevailing advantage for the bulls, while readings below 50 indicate the opposite scenario.
The recent decline was foreshadowed by a bearish divergence (highlighted in green) in the daily RSI. This divergence occurs when a decline in momentum accompanies a rise in price, frequently preceding bearish reversals, as observed in the case of TOTALCAP.
While TOTALCAP found support at the trend line on December 13, it formed a lower high more recently. A breakdown from the ascending support trend line could lead to a further 12% decline, targeting the 0.382 Fibonacci retracement support level at $1.38 trillion. Despite this bearish outlook, a reversal would be indicated if TOTALCAP surpasses the yearly high of $1.63 trillion, signifying the completion of the correction. In such a scenario, a potential 20% upswing towards the next resistance at $1.90 trillion becomes likely.
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