Investing.com -- Bitcoin fell sharply Friday, putting its six-week winning streak in danger after suffering its biggest drop in more than a year, with many attributing the plunge to technical indicators showing popular crypto has reached overbought territory.
Bitcoin fell 11.5% to $7,089.40, down from a high of $7,924 after rising above $8,000 earlier this week.
Bitcoin's meteroic six-week rise from around $4,000 level has left many expecting the popular crypto to suffer a market correction, with the relative strength index (RSI) flagging extremely overbought conditions with a near-90 reading earlier this week.
A reading above 70 usually indicates overbought conditions, while a reading below 30 indicates oversold conditions.
The plunge in Bitcoin has led to some bearish calls from analysts, with some suggesting that a 40% plunge to the $5,000 level could be the offing.
"As we’ve seen this kind of parabolic rise in price action, this would line up perfectly with previous lows," Nicholas Merten, a prominent crypto analyst, said. "So as we go into the end of May and into early June, I would expect we’re going to come down here into this range and hold."
Still, there are signs that the popular crypto is back in demand, with trading volumes over the past weekend hitting record highs of $30 billion, followed by $29 billion on Sunday, according to Coinmarketcap.com.
The downward spiral in bitcoin was mirrored by other cryptos; XRP/USD fell 12.11% to $0.3707, ETH/USD plunged 11.97% to $231.73 and LTC/USD slipped 10.57% to $85.39.
The total crypto market cap, often use to gauge demand, fell to about $222 billion -- about 22% of the current market cap of Microsoft (NASDAQ:MSFT). The crypto market cap had traded above $250 billion at the highs earlier this week.