Bitcoin gold (BTG) may have leapt up in the token rankings, but its gleam may soon dull, the price charts indicate.
Notably, the new cryptocurrency, a bitcoin spinoff with a protocol designed to make mining more democratic, has now become the fifth largest cryptocurrency by market capitalization.
Yet, despite a rally to a high of $413.74 on Nov. 24, and a doubling of prices since Nov. 19, BTG faces plenty of skepticism in the investor community over its real-world role. Comments on social media indicate the investors feel the token is overvalued, with few (or no) apparent use cases.
As a result, the gains to over $400 look to be speculative in nature, unless traders are anticipating use cases to appear.
The price action analysis, though, indicates a correction may be on the way.
At press time, BTG is at $361 – up 4.5 percent for the day, as per CoinMarketCap. Over seven days, the cryptocurrency is up 185 percent.
4-hour chart
The above chart shows:
- A bull flag breakout followed by a rejection at the rising trendline hurdle.
- The relative strength index is losing altitude, signals bulls are losing control.
A bull flag breakout is a continuation pattern ( i.e. an upside break yesterday meant the rally from the low of $150 has resumed). However, prices failed to cut through the resistance offered by the rising trend line.
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The weak follow-through to the bull flag breakout indicates exhaustion, and suggests the potential for a drop to $250 levels in the short-run.
However, a break above $400 in the next 12 hours could yield a rally to fresh record highs above $480 levels.
Gold pan image via Shutterstock