Following Bitcoin’s overwhelmingly positive price action over the past couple of weeks, the cryptocurrency has finally hit a strong level of resistance that sent it spiraling downwards. Now, BTC is beginning to establish fresh levels of support and resistance, which may lead to the formation of a fresh trading range.
Although today’s drop has allowed Bitcoin’s bears to take control of the cryptocurrency, analysts are now explaining that BTC does have multiple levels of strong support formed throughout the $4,000 region, which means that a drop back to the lower-$4,000 level is highly unlikely.
Bitcoin (BTC) Fails to Break Above $5,350
At the time of writing, Bitcoin is trading down over 4% at its current price of $5,060 and is currently trading near its daily lows.
Today’s drop was brought about yesterday after Bitcoin swiftly surged from roughly $5,300 to $5,350, where it faced significant levels of selling pressure that sparked the sell-off that sent the cryptocurrency down to its current price levels.
Importantly, BTC’s downwards descent was halted when it reached the $5,000 region, signaling that a significant amount of support exists at this price level.
Mati Greenspan, the senior market analyst at eToro, spoke about the market drop in a recent email, designating yesterday’s upwards surge as a “fake breakout” that sparked today’s drop.
“We’ve been tracking a new resistance level on Bitcoin at $5,350 (dotted white line). Last night, it managed to break this level, but not in a good way. As you can see, the move higher was quickly followed by a move lower, making this a false breakout,” he explained.
Analyst: BTC Has Significant Support Throughout $4,000 Region
Although many traders and investors were quick to shift their bias back to being bearish after today’s drop, one prominent cryptocurrency analyst recently explained that Bitcoin has multiple levels of support that exist throughout the $4,000 region.
Alex Krüger, an economist who primarily focuses his attention on cryptocurrencies, discussed where BTC’s next levels of support exist in a recent tweet, noting that a drop below $5,000 will likely lead the crypto down towards $4,780.
“Coinbase high was $5489. Don’t expect a pullback to $4000. Too deep. Support: 5000, 4780-4680, 4550 (200DMA), 4400, 4200. Resistance: 5350, 5500, 5750 (weak), 6000, 6400,” he explained.
Coinbase high was $5489. Don’t expect a pullback to $4000. Too deep.
– Support: 5000, 4780-4680, 4550 (200DMA), 4400, 4200
– Resistance: 5350, 5500, 5750 (weak), 6000, 6400Alex Krüger@krugermacroReplying to @ResilenZone
Base case scenario:
– Up. FOMO. 5500 (5000 too close).
– Then down. 4000 feasible, see latecomers fold.
– Then chop in the gap, form a new range
– Sustained bull resumption afterwards
Analysts still waiting for 1500 or 1800 likely won’t be selling many books.
Moreover, Krüger also explained that his ideal target exists at the $4,750 area, and that he does not see Bitcoin making a move below $4,400.
“This is a pullback. Setup is complete. I’m looking for 4750 area, that’d be ideal. Surprised to see price move beyond 4400. Though I rather trade price action and blood than levels,” he said while responding to a tweet asking about how deep the pullback will likely be.
As the crypto markets near the upcoming weekend trading session, crypto traders and analysts alike will likely gain a greater understanding of were BTC’s strongest levels of support exist.
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