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Bitcoin (BTC) is struggling to gather upside traction following Facebook’s official announcement of its Libra cryptocurrency project.
At 09:00 UTC today, the social media giant unveiled its highly anticipated and until-now secretive cryptocurrency, Libra, which will run on a blockchain network secured at launch by 100 distributed computer servers, or nodes.
Facebook’s foray into cryptocurrency is widely being referred to by some experts as the most bullish external tailwind for bitcoin in 2019/2020.
Even so, bitcoin’s price is struggling to gain altitude, having added meager $80 following Facebook’s white paper launch. As of writing, the leading cryptocurrency by market value is changing hands at $9,214 – down 2.8 percent from a 13-month high of $9,477 hit on Tuesday.
Bitcoin’s lackluster response validates our argument put forward on Monday that the markets priced in the news over the weekend, when the cryptocurrency rallied from $8,200 to highs above $9,300.
As a result, bitcoin now faces the risk of a “sell the fact” price pullback, with the short duration technical charts telling a similar story signals.
The relative strength index (RSI) has produced lower highs over the last 24 hours, contradicting the higher highs on price.
That bearish divergence indicates the bulls are running out of steam and a correction could be in the offing.
The indicator has also dived out of the ascending trendline. Further, buy volumes (green bars) have been lower than sell volumes (red bars) over the last 48 hours, also implying buyer exhaustion.
The price could drop to key support at $8,821 (marked by horizontal line) over the next 24 hours. A violation there would expose the 10-day price average, currently located at $8,500.
In fact, a much deeper pullback could be seen if consensus builds in the marketplace that Facebook’s Libra is a more stable, cheaper and an easier to use medium of exchange than bitcoin. After all, Facebook wants to tap into bitcoin’s potential market of unbanked citizens in nations with high inflation, which could be “bad news for bitcoin,” tweeted Peter Schiff, CEO of Euro Pacific Capital.
That said, the bullish case would strengthen if BTC finds high-volume acceptance above $9,442 – the 38.2 percent Fibonacci retracement of the sell-off from December 2017 highs to December 2018 lows. That would open the doors to $10,000.
The long-run outlook remains bullish, with the monthly chart reporting a falling channel breakout and a bullish crossover of the 5- and 10-candle MAs.
The bullish bias will remain intact as long as the price is held above May’s low of $5,263.
Disclosure: The author holds no cryptocurrency at the time of writing
Bitcoin image via Shutterstock; charts by TradingView
