According to CoinDesk data, the cryptocurrency with the highest market value as of press time fell to $26,160, its lowest level since March 17. Prices are down over 12% since May 6, decoupling from the rise of traditional risk assets like Nasdaq.
The BTI indicator, which measures the directional momentum and strength of the bitcoin price, switched from bullish to neutral on Thursday. The indicator has consistently signaled an uptrend since January 13th, except for the brief red flash (downtrend signal) in mid-March and the neutral value on April 24th.
Low liquidity appears to have helped few sellers lower prices, according to Matthew Dibb, chief investment officer at Astronaut Capital.
“Right now there seems to be razor-thin liquidity, even on major exchanges like BTC. While we can’t pinpoint a direct reason for the weakness, all medium to large offerings are driving the market lower,” Dibb said.
Liquidity, or market depth, has deteriorated on major exchanges including Binance recently, making it difficult for traders to fill large orders without impacting prices.
According to Dick Lo, the founder and CEO of quantitative-focused crypto trading firm TDX Strategies, the downtrend could accelerate if traditional risk assets decline.
“We could see an acceleration in the downtrend IF US stocks also start rolling over,” Lo told CoinDesk. “$25,200 is the key support for BTC, followed by $23,100 as a possible downside acceleration.”
Lo added that if prices surge above $28,500, the bearish bias would be invalidated.
As analysts warned last week, Bitcoin’s drop to a two-month low has confirmed a bearish reversal pattern evident on the technical charts. The breakdown has opened the door for a deeper slide towards the $25,000 support.