Bitcoin (BTC) is on the defensive after a drop to six-week lows and could soon test crucial long-term support below $3,300.
The cryptocurrency fell to $3,322 – the lowest level since Dec. 17 earlier today – bolstering the bearish view put forward by Monday’s high-volume range breakdown. Trading volumes jumped to 18-day highs near $7 billion yesterday, according to CoinMarketCap data.
The high-volume sell-off has likely opened the doors to re-test of December lows near $3,100.
Moreover, the long-term support level put the brakes on a sell-off back in December, and was followed by a corrective bounce to levels above $4,000.
A strong bounce from the 200-week SMA line would likely embolden the bulls, but the probability of a bull reversal from that SMA support looks low, according to technical indicators.
As of writing, BTC is trading at $3,380 on Bitstamp, representing a 1.5 percent drop on a 24-hour basis.
As seen above, BTC is again trading within striking distance of the 200-week SMA of $3,298.
The support had held ground on a weekly closing basis (Sunday, UTC) in mid-December, possibly because the relative strength index (RSI) was reporting oversold conditions at the time. This time, however, the SMA support could be breached, as the RSI is currently in undersold territory.