Today, Bitcoin price lost over 6% of its value in mere hours as the top cryptocurrency by market retested the key level of $20,000 per coin.
Why is this level especially critical? And more importantly, will this symbolistic line in the sand drawn by bulls be washed away in a wave of sudden sell pressure?
Bitcoin Joins Broader Crypto Market Bloodbath
The cryptocurrency market was a bloodbath today as news broke that the New York Attorney General’s office filed a lawsuit against crypto exchange Kucoin for selling unregistered securities — which named Ethereum among them.
Bitcoin, the only cryptocurrency not considered a security according to SEC Chair Gary Gensler, also plummeted on the news and broader market selloff.
Altcoins lost anywhere between 3 and 10%, with Bitcoin and Ethereum coming in at roughly a 6% decline each. In the collapse, Bitcoin price briefly fell below $20,000, which is being retested as resistance turned support.
BTC CME zoomed in and out | CME-BTC1! on TradingView.com
Why $20,000 Must Hold As Support
$20,000 is an important level to hold for bulls from both a technical and a psychological perspective. The key level was the peak of the 2017 bull market, and although it was lost temporarily as it’s the FTX collapse, it was reclaimed in early January.
Holding sends a message that the level won’t soon be broken again, possibly ever. Falling back below it would be devastating and bury the chances of a new uptrend beginning before it ever truly got started.
The level is also right at an important gap on Bitcoin CME Futures charts, which if left completely unfilled on a closing basis could continue to act as support. In Japanese candlesticks, gaps are referred to as windows, which can work as local support if retested.
This interesting intersection of resistance turned support, turned resistance and hopefully back into support again, is especially crucial to the entire crypto market and where the trend heads from here.