Bitcoin Falls Amid Silvergate Issues – Can Bulls Defend $21,000 Support?

Disclaimer: The information presented does not constitute financial, investment, trading or other types of advice and is solely the opinion of the author

• BTC broke below an ascending line.
• The 90-day average coin age increased despite fluctuating sentiment.

Bitcoin [BTC] fell sharply on March 2 following Silvergate’s troubles. Major crypto clients such as Coinbase suspended business with the troubled Silvergate bank sending its shares over 50%.

Investors reacted cautiously to the development, as some retreated to stablecoins, leaving most of the crypto market in the red, as shown below.

Read Bitcoin [BTC] Price prediction 2023-23

Source: Coin360 (Daily Crypto Market Performance March 3, 2023)

BTC broke below an ascending line

Source: BTC/USDT on TradingView

BTC posted solid gains after jumping from $16.61K in early January to $25.25K in February. Over the past few weeks, $22.63K has been stable support, showing that bulls weren’t willing to quit just yet. However, Silvergate’s troubles on March 2 tipped the bears to break support.

In addition, BTC broke an important rising line below, turning the market into a bearish structure. Bears must overcome two hurdles to completely destroy any prevailing bullish sentiment.

At press time, they were struggling to bypass the 50-day EMA (exponential moving average) of $22,373. If bears succeed in pushing BTC below the 50-day EMA, they have another hurdle at the 100-day EMA ($21,204) to bypass.

On the contrary, the bear’s inability to overcome the above obstacles may attract another round of buying. That could push the BTC price towards the $25.25K overhead resistance. But bulls will only gain leverage if BTC price action is above the rising line and $21K support is solidly secured.

The RSI showed increased divergence with price action since mid-January, repeating the weakened uptrend. Moreover, the declining average directional index (ADX) confirms the weak uptrend and suggests a potential retracement or consolidation.

Average coin age rose despite negatively weighted sentiment

Source: Sentiment

According to Santiment, BTC’s sentiment remained negative in recent days after sustaining fluctuations a couple of weeks prior.

However, the 90-day average coin age rose steadily over the same period, indicating an accumulation of a broad network – a bullish signal that hints at a potential upside ahead.

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In particular, sharp drops in BTC prices are often accompanied by spikes in stablecoins held by investors.

Interestingly, the sharp drop seen at press time did not correspond to a significant increase in stable coins held by whales. It shows that investors are not exiting yet, and paints a bullish view if bulls defend the $21,000 support.