The Breakdown of Bitcoin’s Support Level: What You Need to Know
Bitcoin recently experienced a drop below its multiweek trading range, raising concerns about potential further losses if key support levels are not defended. Here are the key takeaways:
– Bitcoin fell over 3% on Monday, confirming a breakdown of its three-week long-range play between $29,500 and $32,000.
– The downside has been limited so far by the 50-day simple moving average (SMA) at $29,140.
– According to Katie Stockton, founder of Fairlead Strategies, if Bitcoin closes below the 50-day SMA for two consecutive days, it could see a decline to long-term support near $25,200.
– Weekly chart indicators suggest a potential move below the 50-day average, with an overbought downturn in the stochastic indicator and a pinched weekly MACD signaling a possible setback.
– Alex Kuptsikevich, senior market analyst at FxPro, warns that while the market seems to have found temporary equilibrium, risks of a deeper drawdown persist. The next significant support level would be $27,000, the lower boundary of the rising channel from the November lows and the 200-week moving average.
In conclusion, Bitcoin’s recent drop below key support levels raises concerns about potential further losses. If the 50-day SMA is not defended, Bitcoin could see a decline to long-term support near $25,200. Weekly chart indicators also suggest a possible move below the 50-day average. While the market awaits major central bank rate decisions, risks of a deeper drawdown persist. The next significant support level to watch is $27,000.
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