Bitcoin Fails to Break $7.8K and Now Risks Reversing to New Lows

Whereas Bitcoin (BTC) was hovering at $6,500 earlier this week, it has since rebounded to the resistance zone of $7,800 but failed to break it on the first attempt.

Crypto market daily performance. Source: Coin360

As the short term trend is still upwards, should traders be cautious about the recent price action? Let’s take a look at the charts.

Bitcoin still inside the downwards channel

The more notable timeframe — the daily in this case  — is still showing a downward trending channel since the top at the end of June 2019.

BTC USD daily chart

BTC USD daily chart. Source: TradingView

This downwards trending channel is still active as the price bounced back from the “support” line and the 0.618-0.65 golden ratio Fibonacci level earlier this week.

The green zone around $6,500-6,800 can still be seen as a significant support level here, while the upwards red/yellow area is showing significant resistance. The resistance area is in the $8,000-8,200 zone, which is also around the trendline of the downwards channel.

The total crypto market cap rejected at first resistance

Total crypto market capitalization daily chart

Total crypto market capitalization daily chart. Source: TradingView

The total market capitalization of crypto is showing a similar view as BTC/USD at this point. The market cap held the green zone as support — which is crucial — but couldn’t break the first resistance.

The overall market cap chart often provides a more unobstructed view than Bitcoin regarding price movements and, in this case, is also showing some clear signals.

Total market capitalization chart

Total market capitalization chart. Source: TradingView

In this regard, the price retraced to the earlier resistance in April of this year.

Currently, the price has tested whether that level can be confirmed support and did just that with a bounce from $175 to $207 billion. However, the first resistance at $207 billion was rejected, which suggests a potential retest of the purple area is in order.

If the purple area manages to hold, the total market capitalization is moving inside…

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