Bitcoin steadies below $9,500, down more than 10% for the week
- IRS reportedly turns attention to crypto investors in US.
- $9,000 aligns as the next bearish target for BTC/USD.
- A weekly close below $10,000 could bring in more sellers.
Although it looked like Bitcoin was set to enjoy a quiet weekend moving sideways in its tight daily range a little above the $10,000 mark, a sudden selling wave hit major cryptocurrencies during the early European morning on Saturday and caused Bitcoin to erase more than $500 in a matter of minutes. On a positive note, this sharp drop failed to attract more sellers and the BTC/USD pair went into a consolidation phase. At the moment, the pair is down 4% on the day at $9,420. With today's slump, Bitcoin is now losing more than 10% since the start of the week.
Concerns over the potential negative impact of the US Internal Revenue Services (IRS) looking into cryptocurrency investors for potentially failing to disclose income related to investing/trading in digital currencies seem to be weighing on the market sentiment.
Reporting on that issue, the Los Angeles Times said that more than 10,000 people, who could be subject to penalties, were to receive letters by the end of August.
Technical outlook
Looking at the technical picture, the Relative Strength Index (RSI) on the daily chart is sitting near 40, suggesting that there is more room on the downside before the pair becomes technically oversold. $9,000 (psychological level/Jul. 17 low/Fibonacci 78.6% retracement of June rally) aligns as critical support and a weekly close below $10,000 (psychological level/Fibonacci 61.8% retracement of June rally) could attract more sellers and force the pair to test that level.
BTC/USD daily
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
