Bitcoin Outlook Sours As Price Sheds 70% of Recent Rally

The sellers made a strong comeback above $7,100 after the SEC exercised its right to postpone the decision on whether to approve a rule that would allow Chicago Board Options Exchange to offer shares of a BTC ETF issued by VanExk SolidX Bitcoin Trust.

As a result, BTC closed yesterday on a negative note at $6,719 and fell to $6,360 today - the lowest level since July 16.

At press time, BTC is trading at $6,500 on Bitfinex.

The 7.9 percent sell-off witnessed in the last 24 hours only reinforces the view that a major part of the rally seen in July was likely fueled by speculation that a Bitcoin ETF could be approved by the US SEC within weeks.

Further, the bear grip around bitcoin has strengthened in the last 24 hours as the drop to three-week lows below $6,400 essentially means the cryptocurrency has retraced more than 70 percent of the rally from the June 24 low of $5,755 to July 25 high of $8,507.

Still, all is not lost as the SEC has merely delayed the decision on BTC ETF to September, meaning there is still a 50 percent chance that an ETF would be approved next month.

BTC's break below the ascending trendline has bolstered the already bearish technical setup: the 5-day and 10-day MAs are sloping downwards in favor of the bears.

BTC is trading well below the long-term MAs, which indicates the path of least resistance is to the downside.

As a result, BTC could trade in a sideways manner in a falling channel in the next day or two.

View BTC's drop to three-week lows below $6,400 has likely strengthened the bear grip and opened the doors to $6,000.