Bitcoin on the brink of major 28% correction to $5,900

Bitcoin is perilously clinging on to the $8,000 level of support after failing to break above $8,500 following the price collapse on September 24.

Despite rallying by 6% on Monday, the value of Bitcoin looks increasingly fragile in light of a lack of volume on the buy side.

Aside from the apparent lack of interest at this level, the 22 EMA on the daily chart has now crossed the 200 EMA for the first time since April 10, signalling that short-term momentum is down and that a further correction could be on the cards in the coming days.

If the level of support between $7,800 and $8,000 is breached, Bitcoin can be expected to slide to downside targets of $7,400, $6,750, and $5,900 – the latter of which was used as support throughout the 2018 bear market.

The daily RSI is currently at 35, which is the same level it was at in November 2018 when Bitcoin saw a swift rejection from the $4,200 level.

However, one bullish indicator is the daily stochastics, which has crossed to the upside for the first time since August 31. This move proceeded a 14% rally from $9,500 to $10,850 at the time.

From a fundamental standpoint, this week we have seen the SEC state in a letter that Bitcoin “is not a security”, while the physically settled Bakkt Bitcoin futures has also been operating swiftly despite uninspiring levels of volume.

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