The price of bitcoin appears to be stabilizing.

Amid what has been a wild weekend in the crypto markets, BTC is now down just 5 percent in the last 24 hours to a value of $6,102. Yet, that number doesn't tell the whole story, as the cryptocurrency has been in the midst of heavy volatility after hitting a near three-week low below $5,600 earlier today.

As the charts show, the record rally from the September lows below $3,000 now appears to have topped out at $7,850 last week after a decision to abandon a controversial software upgrade triggered an unwinding of trading positions. The move appears to be sparking a migration of funds to alternative protocols, with bitcoin cash emerging as the primary beneficiary – effectively tripling in price since Thursday.

So far, the bitcoin sell-off appears for real as volumes jumped 61 percent yesterday. A high volume sell-off is often considered as a sign of "panic," and the fact that Google search volumes revisited record highs further corroborates this view.

So, the question now is, how low can prices go?

If history is any guide, the current sell-off in bitcoin is likely to run out of steam below $5,000.

Bitcoin chart

It is quite clear that:

The current retreat in prices looks similar to Case I and Case II as the rally ended with a bearish price RSI divergence.

Bitcoin chart

The RSI is trending lower and well short of the oversold territory. Thus, there is potential for a continued sell-off.

The sharp recovery from the 50-day MA seen today indicates bitcoin could trade sideways for the next couple of days before resuming the drop.

As historical data shows, the current sell-off is likely to leave a major higher low around the 61.8 percent Fibonacci retracement ($4,855.59) and below the 100-day MA ($4,818). Over the next few days, the 100-day MA is seen sloping upwards to $5,000-$5,100 range.

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Price action discussed below could be considered as a sign of a bullish trend reversal:

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