What’s Causing the Decline in the Crypto Market Today?

The value of Bitcoin (BTC) and the overall Crypto Market Cap (TOTALCAP) took a downward turn recently, following a previous surge. BONK, in particular, has experienced a decline since hitting an all-time high. The cryptocurrency market cap had been on a rapid rise since October, aligning with an upward support trend line. This upward momentum peaked at $1.63 trillion on December 9, but the market faced a significant drop on December 11.

What’s Causing the Decline in the Crypto Market Today?

Traders commonly employ the Relative Strength Index (RSI) as a momentum indicator to spot overbought or oversold conditions and make decisions about buying or selling assets. Readings above 50, along with an upward trend, indicate a favorable position for bulls, while readings below 50 suggest the opposite.

The recent decline was foreshadowed by a bearish divergence (highlighted in green) in the daily RSI. A bearish divergence occurs when a decrease in momentum accompanies a rise in price, often signaling a forthcoming bearish reversal – as observed in the case of TOTALCAP.

Bitcoin Surges Beyond Resistance Levels

Just like TOTALCAP, the price of BTC has been on the rise, following an ascending support trend line since October. This upward movement reached its peak on December 8, setting a new yearly high at $44,730.

However, the momentum took a downturn, accelerating the decline on December 11. The entire decrease was foreshadowed by a bearish divergence observed in the daily RSI (highlighted in green).

BONK Experiences a Decline Following Divergence

The BONK price experienced a rapid surge since October, boasting an impressive 67,000% increase. This upward trajectory led to a new all-time high of $0.000015 on December 9.

Interestingly, this peak coincided with the 2.61 external Fibonacci retracement of the previous decline, a level often associated with a potential top. Much like BTC and TOTALCAP, the current decline was foreshadowed by a bearish divergence evident in the daily RSI (highlighted in green).

Should the downward trend persist, there’s a possibility of a 50% decrease, bringing the price back to the previous all-time high at $0.000005. Conversely, a sudden reversal in the trend could result in a 50% increase, potentially retesting the established all-time high.