The Bitcoin Cash price is breaking down this morning and is in danger of capitulation if the next key support level fails to stem the bleed. Bitcoin (BTC/USD) has just sliced through the 200-day moving average like a hot knife going through butter which will have severe implications for the cryptocurrency market as a whole and the Bitcoin Cash price in particular.
Cryptocurrencies are highly correlated, and for the most part, will react to the price of Bitcoin. However, of all the correlations with Bitcoin, Bitcoin Cash is the highest. Therefore, Bitcoin’s collapse is likely to filter through to BCH. This morning, BTC is extending yesterday’s losses and trading below the 200 DMA for the first time since the 3rd of August. As a result, Bitcoin Cash is down around 13% and also below the 200-day moving average.
The daily chart shows BCH is below the 50, 100, and 200-day moving averages. Furthermore, the former support levels at $624, $621 and $605 now offer considerable resistance. However, the price is running into support at $525. Although considering the destruction at the top of the crypto league table, I expect $525 will soon fall.
Below $525, things take a turn for the worse. If the Bitcoin cash price closes below $525 in today’s session, I expect to see further liquidation. In this event, $400 looks like an obvious target. The sharp declines in January, June and July all reversed between $380 and $400, which indicates strong demand at that level. Therefore, unless the cryptocurrency market suffers a colossal liquidation event, $380-400 should hold. As long as BCH remains below the major moving averages, the likeliest direction is lower and the $400 price target is intact. However, if Bitcoin Cash recovers the 200 DMA at $605, the bearish view becomes is invalid.
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