Investors and traders alike got scared in light of the negative actions that the markets have witnessed recently. Bitcoin, the most popular cryptocurrency, experienced its highest levels of selling pressure since the crisis in June and July.
With a high of $22,400 on September 13 and a low of $18,790 today, Bitcoin is down about 8%. The price has fallen by a staggering 13.31 percent.
This can also be explained by unfavorable economic developments in the United States, as well as recent price fluctuations. As of this writing, the intense sale hasn’t lost any of its power.
Price information from the past few days puts bitcoin between $19,344 and $18,346. Financial market participants should not put any stock in these numbers.
Bitcoin needs to crawl back up
Bitcoin’s attempt to return led to the formation of a double triangle, which is symmetrically correlated with the XABCD pattern.
This pattern may indicate a reversal where buyers can enter at a discount and sellers can make a profit. However, this was not the case.
Bitcoin may retest the crucial area of $20,000 from before if it retraces to the $18,000 level.
Bitcoin is selling at a huge discount to the 78.60 Fibonacci level now. Being far from the important psychological threshold of $20,000, this price point could hamper any further recovery.
Investor confidence can only continue to rise with the above price in place.
The shift can only happen if the bulls step in to buy the ongoing decline and wrap around the downtrend.
Bitcoin price may be able to retest the $20,500 resistance if the above hypothetical event occurs. The Fibonacci level of 61.80 is where the aforementioned resistance is located.
However, Bitcoin’s connection to the broader financial landscape is not helpful. Bitcoin’s tight correlation with the S&P 500 and NASDAQ indices makes it difficult to regain bullish momentum.
BTC needs all the energy it can gather to normalize
Bitcoin’s recovery is in jeopardy as the larger financial sector sees a sharp decline. In fact, it may not even reach the mentioned resistance of $20,500.
According to popular crypto-analyst woonomics, Bitcoin hasn’t hit rock bottom yet. While assessing Bitcoin’s past and present performance, he discovered that only 52 percent of all coins are underwater.
Bitcoin’s previous lows were 61%, 67%, and 57%. The data he provided indicates that if Bitcoin reaches rock bottom again, it will not be at $18,000.
For Bitcoin to get out of this predicament, the larger financial sector must recover from the current crash in order to restore investor and trader confidence.
As of this writing, Stoch RSI values are converging, which could provide a modest price boost.
However, with the current market dynamics following a strong downtrend, a rebound is unlikely.
BTC total market cap at $359 billion on the daily chart | Source: TradingView.com Featured image Pixabay, Chart: TradingView.com
(The analysis represents the author's personal views and should not be construed as investment advice).