Bitcoin Price Bears

Bitcoin (BTC) trades below $20,000 for the first time in over a week as weakness in Asian stocks raised the prospects of further downside. Bitcoin traded as low as $19,850 on Wednesday recovering slightly to the current price around $20,112. 

This was characteristic of a market still in correlation with moves in global equities. The S&P 500 had closed the June 28 session 2% off, while the Nasdaq Composite Index dipped 3%. Similarly, Hong Kong’s Seng was down 2.1% lower on the day, while China’s Shanghai Composite Index traded 1.4% down over the same period. 

With no bullish signals coming from the macro economic environment, the flagship cryptocurrency has little stopping it from revisiting the lower end of a descending parallel channel over the next few weeks. 

“Most short-term technicals point to an above-average chance of a final ‘washout’-style decline before this bottoms,” technical strategist at Fundstrat Mark Newton, said in a note on Tuesday. If the support at $19,500 fails, Bitcoin could possibly drop toward the $12,500 support line, “which I expect should be an excellent place for intermediate-term buyers to add to longs,” he wrote.

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Newton’s sentiments were corroborated by technical indicators on the weekly price chart which showed Bitcoin price trading within the confines of a descending parallel channel projecting a slump to $12,000. This could give sidelined investors an opportunity to buy Bitcoin at lower levels.

Bitcoin Price Downtrend Remains Intact

After producing the lowest weekly close since December 2020 on June 13, the technical setup on the weekly chart (below), hinted at further losses for Bitcoin price. The appearance of a descending parallel channel added credence to this bearish outlook. If the bears continue to aggressively defend the immediate resistance at $22,403, embraced by the middle boundary of the descending channel, the big crypto may drop towards $15,000.

Traders could expect buyers to aggressively defend this level with the likelihood of staging a comeback. However, increasing overhead pressure could push the pioneer cryptocurrency towards the technical target of the prevailing chart pattern around $12,522.

BTC/USD Daily Chart

The weekly Moving Average Convergence Divergence (MACD) indicator is moving downwards in the negative region with the 12-weekly EMA below the 26-weekly EMA, emphasizing the negative market sentiment. In addition, the Relative Strength Index (RSI) was positioned in the oversold region. The price strength at 26 affirmed the bears’ grip on BTC, suggesting that there was still more room for further losses. This was further supported by the position of the moving averages and the Parabolic SAR above the price.

On the upside, bulls could try to defend and hold the price above the $19,500 support level. If they succeed, Bitcoin price may turn up from the current levels to tag the middle boundary of the channel at $22,400, before reaching the $25,000 psychological level. Market participants could expect the local top for the pioneer crypto to be formed here.

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