BTC price is under pressure to sweep through lower levels in search of liquidity and an
opportunity to launch the next bull market.
Key market-moving events last week such as the release of the Federal Open Markets Committee (FOMC) meeting minutes implied that further rate increases were necessary to control inflation in the US.
On top of this came news that Elon Musk’s SpaceX had written down $377 million in Bitcoin, which caught the market by surprise, and triggered a sell-off following a period of record low volatility.
BTC Price Sinks Below Bull Market Moving Averages
Bitcoin is trading below all the moving averages, considered to be necessary for the bull market by analysts like Rekt Capital. The indicators in question are the 21-week Exponential Moving Average (EMA), the 50-week EMA, and the 200-week EMA.
With the largest crypto trading below all those moving averages, declines are bound to take precedence. Likely to suffer the most are retail investors who may have purchased BTC as the price jolted to $32,000 in early July with the hope of a breakout to $40,000.
#BTC has officially Weekly Closed below all three of these Bull Market moving averages$BTC #Crypto #Bitcoin https://t.co/NpEOGhqeaF
— Rekt Capital (@rektcapital) August 21, 2023
Based on the daily chart, after failing to make a successful rebound above $27,000 over the weekend, BTC is hovering around $26,000 in search of sturdy support. However, the path with the least resistance appears stuck to the downside.
The Moving Average Convergence Divergence (MACD) adds credence to the bearish outlook following the confirmation of a buy signal in early July.
Traders trading this indicator carefully timed the MACD line in blue crossing below the signal line in red, which later dropped beneath the mean line (0.00).
Like the moving averages in the weekly time, Bitcoin still holds below the 50-day EMA (red), the 100-day EMA (blue), and the 200-day EMA (purple) on the daily chart.
For now, $26,0000 is the most important support, because it could determine where BTC price heads to over the next few weeks.
A sustained break below this price level could trigger another sell-off as fear grips the market. Retail investors would be in a rush to protect their capital – in the process, selling pressure would explode sending Bitcoin on a final descent before the 2024 – 2025 bull market.
It would also be premature to rule out a possible rebound from the same $26,000 support. However, with the current dilapidated market structure, it would take bulls a force equal to move Mt. Everest to send Bitcoin on a rally beyond $30k.
That said, investors must tread carefully and be ready for all possible outcomes. Notably, continued losses below $26,000 may not necessarily mean doom for Bitcoin. On the contrary, the dips might be a blessing in disguise, as investors are presented with an opportunity to stack up on Bitcoin before the final ascent into the bull market, expected after the halving in April 2024.
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
