Bitcoin and the aggregated crypto markets are currently coming off of a period of large volatility that appears to have put the entire market’s recently established upwards momentum in danger of being lost. Since incurring significant selling pressure over the past couple of days, however, Bitcoin (BTC) has been able to stabilize in the upper-$7,000 region.
Despite this short-term stability, analysts believe that Bitcoin is still vulnerable to further losses in the near future.
At the time of writing, Bitcoin is trading down roughly 4% at its current price of $7,683, but is still up slightly from daily lows in the $7,500-region, which is where the cryptocurrency found some levels of support that helped slow its descent that was sparked a couple of days ago.
Although Bitcoin has not incurred any selling pressure that is massive enough to lead to a linear drop, it has been on a slow decline ever since it rapidly surged to $9,000 before incurring enough selling pressure to put its bullish momentum in jeopardy.
In its current state, BTC can be characterized as fragile, as any notable increase in selling pressure could snowball and lead to further losses.
Despite this, the latest dip may have simply been a follow through of a bearish technical formation that was formed previously, which may mean that the crypto will soon retest its next notable resistance level around $8,500.
Big Cheds, a popular cryptocurrency analyst on Twitter, discussed this possibility in a recent tweet, saying:
“$BTC #Bitcoin – This move down to $7500 took care of that bearish divergence (from $8700+) and now the slope of OBV matches price. If you believe in the rising wedge break, then no reason this can’t back test and get rejected at $8500.”
Despite finding support around its current price levels, analysts are still quick to note that Bitcoin may continue to drop lower before hitting a price that provides enough buying pressure to send its price surging higher.
Alex Krüger, a popular economist on Twitter who focuses primarily on cryptocurrencies, shared his thoughts in BTC in a recent tweet, noting that it will be primed for a move up if it is able to climb above $8,000, but it may first drop lower.
“$BTC still vulnerable. Longs once above $7900-$8000 (higher) or on panic flushes (lower). Next support: 7600-7435, 7200, 6800, 6400. 6800 is major, determined by all three price action, moving averages (50DMA) and fibs (Dec lows to 2019 highs). 6400 is the bull market level,” he explained.
As the week continues on and Bitcoin’s price action continues to unfold, it is not unlikely that traders and analysts will soon gain a better idea of whether or not BTC is still in a firm uptrend, or if it is entering a period of consolidation.
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