It’s finally here: Bitcoin has finally taken a turn for the worse after months of sideways movement. This week’s candle is down 21% at the time of writing, greatly fueling market fears.
The pressing question, which has been going on for months, is where the final fund will go. Many investors were confident that the support box around $17,500 would remain strong enough and we could expect a big move higher from there. This turned out to be fiction and this week the largest cryptocurrency hit a new low at $15,750.
Will it end there or can we expect more red candles? That is the main problem in today’s analysis. We will analyze the key support levels and highlight some lower indicators.
The main support level
The $14,000 level, or to be precise; The $13,800 level is one of the key levels for Bitcoin as the downtrend resumes. It’s also one of the most quoted lower levels, which is understandable.
As you can see in the chart below, the reason for the importance of this level is mainly related to the previous bear market. There, this level has supported several weekly candles. Also in 2019, the same $13,800 level was rejected as resistance and it took several months for the price to rise above it.
There is a lot of price action at this level and it has the potential to act as a bottom or at least a major support. But what about the thicker black line?
Assuming fear persists and more things happen in the crypto space causing even more people to sell out of fear, the first black line ($13,800 level) may not hold. So Bitcoin price is just over 15% lower at the $11,500 level. That’s really great support. Losing that level is what I would call truly disastrous for Bitcoin.
However, it is not good to get too far ahead of the facts. Right now the price is looking for strong support and I am confident that $13,800 could play a big part in this. Not only because there is significant price action, but also because Bitcoin is hitting a bottom indicator at this level.
What role does the 400 week SMA play in bottoming out?
As I mentioned in the August 30 analysis, there are several indicators that Bitcoin has bottomed out in recent cycles.
At number one in the image below, we see the 2018 bottom formed at the 200-week SMA. This is an indicator that summarizes and averages the last 200 weekly prices. This creates a line. With the Covid crash, we saw the lowest price at the 300 week SMA. This indicator works on the same principle, but now not the average of the last 200, but 300 weeks.
The price has been below the 200-week SMA for several months and this week also below the red line (300-week SMA). And now?
We discussed that $13,800 is an important level when analyzing price action. But I found that this is also exactly the level where Bitcoin will reach the 400-week SMA. This makes this level even more interesting. Every Bitcoin bottom in all previous cycles has reached one of the SMA’s weekly indicators. Is there a good chance this will happen again? yep. No guarantees, but definitely something to keep in mind…
Source: Btc Direct
John Cameron is a journalist at The Nation View specializing in world news and current events, particularly in international politics and diplomacy. With expertise in international relations, he covers a range of topics including conflicts, politics and economic trends.
