Bitcoin Is Carving Short Term Bottom Near $4K After A Massive 50% Decline

Aayush Jindal

1 year ago

2 mins read

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Bitcoin is down more than 50% and broke many key supports such as $5,000 against the US Dollar. BTC price seems to be forming a short term bottom near $4,000 and it could recover.

Bitcoin tumbled below many important supports and tested $4,000 against the US Dollar.
The price is currently recovering from a major technical level near the $3,900 area.
There was a break below a key bullish trend line with support at $8,480 on the daily chart of the BTC/USD pair (data feed from Kraken).
A short term recovery is possible, but there are many hurdles for the bulls near $5,600 and $6,000.

Bitcoin Price Holding Key Technical Support

The past few sessions were absolutely catastrophic, as bitcoin fell significantly from well above the $8,000 level. BTC price is down more than 50% and it broke many supports, including $7,200, $6,500 and $5,000.

The decline was initiated after there was a break below a key bullish trend line with support at $8,480 on the daily chart of the BTC/USD pair. The pair settled well below the $6,500 level and the 100-day simple moving average.

Moreover, bitcoin price broke the last swing low at $6,435 and extended its decline below $5,000. The bears were able to push the price below the 1.236 Fib extension level of the main upward move from the $6,435 low to $10,528 high.

The price spiked below the $4,000 and tested the $3,900 zone. It seems like the 1.618 Fib extension level of the main upward move from the $6,435 low to $10,528 high is acting as a strong support.

What are the Chances of a Recovery?

Bitcoin is showing a few positive signs above $4,500 and it is trading near $5,000. On the upside, an initial resistance is near the $5,600 level.

The first major resistance is near the $6,500 area (the previous breakdown zone). If the price manages to climb back above $6,500, it could start a fresh increase in the coming days.

Conversely, there is a risk of another decline below the $4,500 and $4,000 levels. The next major supports are near the $3,800 and $3,550 levels, below which the bears are likely to aim a test of the $2,400 level. Overall, the recent decline was nasty and it might take a few months for the market to recover if bitcoin stays above the $4,000 mark.

Technical indicators:

Daily MACD – The MACD is showing a lot of bearish signs.

Daily RSI (Relative Strength Index) – The RSI for BTC/USD is now well below the 20 level.

Major Support Levels – $4,500 followed by $4,000.

Major Resistance Levels – $5,600, $5,800 and $6,500.

Aayush Jindal

Aayush Jindal, a luminary in the world of financial markets, whose expertise spans over 15 illustrious years in the realms of Forex and cryptocurrency trading. Renowned for his unparalleled proficiency in providing technical analysis, Aayush is a trusted advisor and senior market expert to investors worldwide, guiding them through the intricate landscapes of modern finance with his keen insights and astute chart analysis.

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