Bitcoin Loses Critical Level Below $23,000, Bears Prepare To Attack?
Bitcoin has been slowly trending to the downside this week. The first cryptocurrency by market capitalization appears to have lost momentum as uncertainty enters the crypto market from legacy markets.
At the time of writing, Bitcoin is trading at $22,600 with a loss of 4% in the last 24 hours and a loss of 1.2% in the last seven days.
The cryptocurrency has lost its 200-day simple moving average (SMA) of $22,800. In the short term, recapturing this level is crucial to maintain the bullish momentum.
Bulls need to maintain BTC’s current price levels and push beyond its 200 SMA to prevent the cryptocurrency from retesting previous support levels. Analyst Caleb Franzen presented the chart below to show how BTC’s price was rejected at a critical level.
The cryptocurrency managed to hit the top of the channel shown above and now looks set to retest the lower level at $21,200. This level should act as support to stop a downtrend below $20,000.
Data from Material Indicators (MI) shows over $20 million in bid (buy) orders for Bitcoin between $22,200 to $22,400. It remains to be seen if these orders will be able to push the bears back, below these levels, the order book looks thin at $19,000.
At the time of writing, there are $16 million in buy orders at $19,000 that will act as the last line of defense in case Bitcoin continues to decline. Franzen so the following on BTC’s potential to see further losses in the near term:
Whether you want to call this a parabolic trendline or a curved trendline is irrelevant to me. Based on what I’ve heard from the analysts who use them, should we be concerned about short-term momentum reversal for Bitcoin? I do not know (…). Markets can fluctuate between both extremes of sentiment/trend. (…) I think the scale and speed of this movement has been too great.
Will this time be different for Bitcoin?
Another perspective on the price of Bitcoin shows that it is currently trading just above its 200 weekly moving average (WMA) of $22,300. The cryptocurrency has only lost this level 7 times since its inception, said Ark Invest analyst Yassine Elmandjra.
When the cryptocurrency has regained this level after a significant loss, it often tends to the upside. On average, Elmandjra said, Bitcoin records a 240% increase when this happens.
However, BTC may not follow a similar path immediately, the cryptocurrency may face some bearish and sideways price action in the meantime. The analyst so:
On a relative basis, if this bear market is as severe as the 2018 bear market, bitcoin could see more downside. Bitcoin has corrected 72% from its all-time high. Bitcoin usually finds global cyclical bottoms with a correction greater than 80%.
