Bitcoin's downtrend has been active for days and the past week has left it in a precarious position. BTC is struggling to maintain the price above the critical support level which, if failing, could result in catastrophic losses.
However, it is still possible to avoid a bad situation if the bulls push BTC past the critical resistance that has held prices in recent days.
Bitcoin struggled to gather strength as the bear expanded
At the time of writing, Bitcoin is up 0.76% at its current price of $ 8,638, down slightly from the daily high of $ 8,800.
Now, it looks like the leading cryptocurrency is entering a sideways trading around current price levels and trying to rally enough momentum to break above the recent high of $ 8,800, which appears to have become resistance level.
Cred analyst explained in a recent tweet that as long as BTC is below $ 8,700, bears will still dominate and continue to decline in the short term.
Watching D1 time frame to assess how price reacts to W1 support (midrange at $ 8700s).
Nearest resistance is D1 level at $ 8900s.
These two levels have formed a narrow range.
Close below blue = bearish cont. likely
Close above blue = FTA retest & retrace higher likely pic.twitter.com/6q0TPsrweR
– Cred (@CryptoCred) February 29, 2020
“BTC update: D1 closes but loses support (blue) and finds resistance there. There is no positive evidence that W1 support ($ 8,700) will function at this time. The intraday trend is falling to the close of W1, otherwise D1 & W1 returns above $ 8,750 (i.e. the current technical analysis is incorrect).
BTC investors may panic if they break below this level
Cred is not the only person who favored the bear, as trader SalsaTekila also believes that BTC could be horribly sold off if it breaks below last Friday's low at around $ 8,500.
Currently short $ BTC: I believe if we lose Friday low we’ll see panicking and a CME down-gap. Monitoring closely for now … Praying for bulas betting with beras.
– SalsaTekila (JUL) (@SalsaTekila) March 1, 2020
“At the moment, short BTC: I believe that if we lose the low of the 6th day, we will panic and create a declining CME gap. Watch closely right now. ”
If these lows do not hold, BTC appears to have some significant support around $ 7,700. Thus, this is where prices can plummet until the sell-off slows down.
The way Bitcoin closes its weekly weekly candle over the next few hours will provide significant insight into where the market trades in the coming weeks and months.
Besides, traders also pointed out three factors that led them to believe that Bitcoin would bottom out at $ 6,500.
Technical structure of Bitcoin
By the end of February, technical analysts had expected Bitcoin to protect the strong support levels found at $ 9,550.
$ 9,550 is an important area for Bitcoin because it was formed in October 2019 and also the Fib 0.615 level usually acts as a reversal.
The price dropped sharply below $ 9,550 quickly after the third test, causing a series of long contracts to be liquidated on the margin trading market.
When the Bitcoin price broke down from the inverse head and shoulders (IHS) structure, critically acclaimed analysts like Pentarhudi who had successfully predicted a number of market cycles over the past 3 years said that the range was $ 6,000 to $ 6,500. is the next target.
Scenario BTC price drops to $ 6,000 | Source: Pentarhudi Tradingview
Sponsorship rate and open position
For a long time, the sponsorship ratio of both Bitcoin and ETH was still higher than 0.1% on BitMEX, Binance Futures and other large margin trading platforms.
The rate of financing for permanent swaps (non-expiring futures) increases as there are longer contracts on the market. When there are more short than long, the sponsorship ratio becomes negative.
A positive funding ratio means paying a fee every 8 hours for long contract holders to keep their positions open and vice versa for short contract holders.
According to analysts, the funding imbalance situation is now worse than October 2018. In December 2018, Bitcoin price entered the bear market severely, dropping to as low as $ 3,150.
Foundation for the possibility of price increases in the cryptocurrency market
Bitcoin up from $ 8,000 to $ 10,500 primarily driven by fake orders or buy orders.
This game is currently banned in the stock market. It was used to create an unrealistic demand for Bitcoin to create the fear of missing out (FOMO) among retail traders.
After the Bitcoin price rises rapidly in a short time frame, it will correct sharply. When price movements are mainly based on fake orders, there is a risk of a faster pullback.
According to trader Jacob Canfield, $ 8,000 and $ 8,400 are still two strong support levels for Bitcoin in the short term.
$ 8000 won’t break first try imo, so it looks like a good level to scalp from.
$ 8400 is also a strong level at the moment as sellers are losing some stream.
Adjust to the market.
– Jacob Canfield (@JacobCanfield) March 1, 2020
“Reviews mine, $ 8,000 will not be broken on the first try, so it seems like a good level to go up. $ 8,400 is also a strong level at the moment as sellers are diminishing. Adjust to market ”.
But as Nik Yaremchuk said at Adaptive Capital, the large amount of buy orders at $ 7,500 can cause BTC to return to the area between $ 7,000.
With the Bitcoin trend moving too long on both the up and down sides, the trader predicts a pullback that will bring the price down to $ 6,000 again.
You can see the price of Bitcoin here.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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