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Bitcoin seems on the verge of re-testing previous support levels. The number one cryptocurrency has been experiencing a persistent downside which took it to a multi-year low of around $17,000.
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Bitcoin has been trying to reclaim previously lost territory, but the selling pressure continues driven by negative news around the crypto space and the shift in monetary policy from the U.S. Federal Reserve (Fed). At the time of writing, BTC’s price trades at $20,000 with a 10% loss in the past week.
BTC trends to the downside on the 4-hour chart. Source: BTCUSD Tradingview
Analyst Michaël van de Poppe believes BTC’s Price remains in a good position after it was rejected at $21,000. If the cryptocurrency manages to hold above $20,000, there is potentially more fuel for bullish continuation. Via Twitter, the analyst said:
Sweep of the lows and holding. As long as $20k holds, it should be fine for a sweep of the previous high at $21K and then a higher high at $23K and potentially $24K are doable. Longs still open.
Data provided by Material Indicators (MI) records some support for Bitcoin below $20,000. This suggests the cryptocurrency could drop below its current levels.
However, there are around $30 million in bids and orders for Bitcoin around $19,000. This area should operate as critical support in case of further downside.
If those levels fail, there are still $40 million in bids orders between $17,800 and $18,000 which could provide an extra layer of support. The order book looks thin below these levels
BTC (blue line on the chart) with $40 million in bids at around $18,000. Source: Material Indicators.
Above current price levels, there are over $20 million in asks orders around $21,000 alone. This level will continue to be a major resistance area and an obstacle for BTC’s price as it consolidates around the area.
The analyst at Material Indicators shared the following on the hurdles standing between BTC and future appreciation:
This is why we wait for confirmations. Despite the sentiment and the #TradFi gains yesterday, the rally lost momentum before it could test the 200 WMA. Now Fire Charts shows ~$60M in ask liquidity stacked between here and the 200 WMA range.
In that sense, analysts from MI emphasized that it is impossible to know with certainty when BTC will bottom. However, there are certain clues that could help investors to identify a decline in the bearish trend.
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For example, BTC’s price usually bottoms and then goes into a long period of consolidation. The analyst stated via Twitter without ruling out another leg down:
the market is overdue for a rally, and the fact that moves to or below the 200 WMA have historically led to Bull Markets, we can’t validate that until price reclaims the key moving averages, starting with the 200 Weekly MA.