The price of bitcoin has been in free fall for the past few days after dropping below the $30K support level. It’s now found close to the $20k breakpoint, so it’s important to see what will be the immediate lifeline if it fails.
The price has also broken the $24k demand zone to the downside and is moving towards the significant $17-20k area with huge momentum. This level may finally hold the price as the RSI also signals high oversold Bitcoin (below 30).
As such, the mentioned support is likely to see a bullish bounce or consolidation. However, it may still be too early to speak of a bear market day as the price will need to rebuild the $30k resistance and the 50-day moving average before any bullish reversal can be expected.
4 hour chart
On the 4-hour timeframe, you can see that the price has broken through the $24,000 demand zone. Meanwhile, the price retested the broken $24k level to the downside before dropping further.
The RSI indicator is also oversold in this time frame and may form a bullish divergence with the price, indicating a potential bullish rebound in the short term. The $24,000 level will now act as a resistance that could push the price down if the price bounces off the $20,000 area. Over the next few days, the lower timeframe price action should be closely monitored to determine if a bullish pullback or further bearish continuation should be expected.
Bitcoin Capitalization Models
Over the past few weeks, the price of bitcoin has quickly fallen to the $20k level, and the main question on everyone’s mind is where the bottom is most likely to form. Analyzing past cycles can provide some valuable information.
This chart consists of a 200-day moving average, market cap, realized cap, and delta cap. During previous bear markets, there have been cyclical lows between Delta Cap and Realized Cap (you can explore these figures on the CryptoQuant website).
The strike price is currently $23K and the delta price is around $16K, so the market has already entered a potential lower range. However, given the current global macroeconomic and geopolitical situation and even previous bitcoin cycles, it could take up to a year or more for the bottom to form.
This lower accumulation phase will end when the market rises above the selling price again, and a bull market will begin when the price successfully breaks the 200-day moving average (currently at $40k).
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Cryptocurrency charts by TradingView.
Credit : cryptopotato.com