Bitcoin Loses Critical Level Below $23,000, Bears Prepare For Assault?

Bitcoin has been slowly heading to the downside this week. The number one cryptocurrency by market cap appears to have lost its momentum as uncertainty seeps into the cryptocurrency market from the old markets.

At the time of writing, Bitcoin is trading at $22,600 with a loss of 4% in the last 24 hours and a loss of 1.2% over the past seven days.

BTC price is moving sideways on the 4 hour chart. source: BTCUSDT TradingView

The cryptocurrency lost its 200-day simple moving average (SMA) at $22,800. In the short term, a recovery of this level is essential to maintain the bullish momentum.

Bulls need to maintain the current levels of BTC price and push beyond the 200 SMA to prevent the cryptocurrency from retesting previous support levels. Analyst Caleb Franzen provided the chart below to show how BTC price was rejected at a critical level.

Source: Caleb Franzen via Twitter

The cryptocurrency managed to reach the top of the channel shown above and now appears ready to retest the lower level at $21,200. This level should act as support to stop the downtrend below $20,000.

Data from Indexes of Materials (MI) shows over $20 million bid (buy) bids for Bitcoin between $22,200 and $22,400. It remains to be seen if these orders will be able to push the bears back, as below those levels, the order book looks weak up to $19,000.

At the time of writing, there is $16 million in buy orders at $19,000 which should act as the last line of defense in case Bitcoin continues its downtrend. Franzen He said Here’s how BTC could see more losses in the short term:

Whether you want to call this a parabolic trendline or a curvilinear trendline has nothing to do with me. Based on what I’ve heard from analysts who use it, should we be concerned about Bitcoin’s short-term momentum reversal? I don’t know (…). Markets can swing between sentiment/trend extremes. (…) I think the magnitude and speed of this movement was too great.

Will this time be different for Bitcoin?

A different perspective on Bitcoin price shows that it is currently trading just above the 200 Weekly Moving Average (WMA) at $22,300. The cryptocurrency has only lost this level 7 times since its inception, said Yassin Al-Manjar, an analyst at Ark Invest.

Once the cryptocurrency regains this level after an obvious loss, it often tends to the upside. On average, Almandjra said, Bitcoin records a 240% increase when this happens.

However, BTC may not follow a similar path immediately, as the cryptocurrency may experience some bearish and sideways price action in the meantime. analyst He said:

On a relative basis, if this bear market is as steep as the 2018 bear market, bitcoin could see further declines. Bitcoin has corrected 72% compared to its all-time high. Bitcoin typically finds global cyclical bottoms with a correction greater than 80%.

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