Bitcoin Takes a Tumble
On Monday, Bitcoin decided to spice things up with an abrupt drop below the crucial $7,040 support level, crashing down to the chilling realm of $6,800. This level had previously served as a haven for traders on November 22 and 27, who likely had some déjà vu watching Bitcoin park its digital behind there again. Spoiler alert: It’s having a hard time holding onto $6,600 now. If that support crumbles, all eyes will be on the long-term descending channel trendline support at $6,400.
Bear Crosses Everywhere!
It gets worse—and not in a good way. As highlighted by coin analyst Keith Wareing, Bitcoin’s recent performance is a veritable feast of bearish signals on multiple time frames. Just yesterday, we saw a bear cross make its debut on the monthly moving average convergence divergence (MACD) chart for the first time since June, signaling more gloomy vibes ahead.
What’s the MACD Saying?
The monthly MACD histogram has given up on the idea of positivity and flipped negative, a sign that the bear market could continue its grim procession. It’s like getting kicked when you’re already down, but alas, that’s the crypto world for you.
Drastic Measures from the Moving Averages
Within the daily time frames, things are looking particularly dire with the 100-day and 200-day moving averages crossing each other like they’re in a competitive dance-off—except this dance is decidedly bearish. Such occurrences are as rare as a healthy fast food burger, so traders best heed the warnings.
RSI: Riding the Oversold Wave
Adding to the doom and gloom, the relative strength index (RSI) on the daily chart is nose-diving into oversold territory. Have the bulls thrown in the towel? It appears so—traders are showing little inclination to buy the dip. The last time Bitcoin hit $6,522, we saw the RSI drop to a nifty 22, indicating that if the downtrend resumes, we might be seeing that level again. Buckle up!
Historical Support Levels
Now, a dip to the $6,400 support level isn’t quite a disaster. For those with long memories, remember when Bitcoin hung out in the $6K territory for nearly eight months leading up to that notorious November 2018 downward spiral? Historically, that was a wild ride, and although we don’t want to scare anyone (too much), it’s essential to keep it real and expect the unexpected.
Volume Profile Insights
According to the volume profile visible range (VPVR), Bitcoin has some cushion down to about $6,300. But be wary—if we dip below $6,200, there’s a real risk the price could plummet straight to $5,350. That’s where the support from Bitcoin’s earlier jump off $3,120 in February was built. Yikes!
Looking Ahead: Double Bottoms and Cautious Strategies
Now, while the analysis doesn’t scream a drop to $5,300 or $4,100, the price activity does indicate potential further downside. But fear not! There’s always the chance Bitcoin could form a double bottom around $6,520, similar to what we saw on November 25 and May 17, 2019. Optimism can be a scarce resource in crypto, but it’s not entirely extinct!
Active Trading Concepts
In the interim, traders should keep their eyes peeled for a potential oversold bounce. Those feeling bold might consider betting on a bounce between $6,500 and $6,400, placing stop-loss orders just below entry points. If that tactic flops, an alternative could be a low-leveraged long at $5,300 or taking a gamble on a deeply oversold bounce there.
Final Thoughts
The views and opinions expressed reflect the author’s personal insights and not necessarily those of any crypto publication. As with all investments, tread carefully—research diligently, and remember, in the unpredictable realm of crypto, it’s both the best of times and the worst of times.
