Is it well positioned for breakout despite potential fall?
Bitcoin (BTC) is currently experiencing a downward trend in response to recent regulatory actions by the US government against major players in the cryptocurrency market. BTC has struggled to surpass its significant resistance wall at $28,700, leading some investors to suggest that a pullback would be healthy for the largest cryptocurrency in the market.
Bitcoin is trading at $26,800 and has remained relatively stable since Monday, after falling below the annual high of $28,700 reached in March. Bitcoin has recently experienced a strong uptrend, with a gain of over 45% from the lower levels, but can BTC sustain a 7% dip towards the %25,000 support?
Healthy pullback for Bitcoin or another chance for bears to take over?
According to trader and cryptoanalyst Rekt capital, Bitcoin needs a monthly candle above $25,000 to confirm a macro downtrend breakout, and with BTC trading at $26,900 at the time of writing and with three days to hold above that key level, chances are good for bulls to confirm the new trend.
Furthermore, a monthly candle above $25,000 would indicate a significant shift in Bitcoin’s long-term trend, potentially leading to further gains, new yearly highs and bullish market sentiment.
Despite the potential price drop, Bitcoin is poised for a breakout and a macro trend shift. As the month-end approaches, Bitcoin’s market position looks favorable. Interestingly, even if Bitcoin falls by $1,900 (7% of today’s price), it may still be well positioned for a continuation of the bull run.
Will BTC’s dominance in the market follow the price action?
According to Rekt, Bitcoin’s dominance is in a Back Wedge structure that has existed since May 2021. The analysts suggest that Bitcoin’s dominance is also well positioned for a confirmed breakout from this structure, with a potential monthly close beyond the downtrend resistance dating back to May 2021.
Rekt Capital’s analysis suggests that Bitcoin dominance could dip into the Wedge peak, as shown in the chart above, leading to a potential influx of money into altcoins.
Bitcoin is trading within a wider range of $26,700 to $28,600 and it is challenging to predict the price action until a significant break occurs.
However, if Bitcoin experiences a drop below $26,000 and approaches $25,000, it will face strong support above the 55 exponential moving average (EMA). This support level could help Bitcoin recover and make another attempt to break above the resistance level.
BTC has the potential to recover the $30,000 level it lost during the June 2022 bear market. To achieve this, the cryptocurrency needs to maintain its nearest support level and trade above the EMA 55 to attempt to storm the $28,600 resistance.
Featured image from Unsplash, chart from TradingView.com
