Bitcoin has seen some intense bearish price action throughout the past several days, with its over $1,000 decline from weekly highs of nearly $10,000 being a major blow to its previous strength.
It now appears that the benchmark cryptocurrency could be positioned to see significantly further losses in the days and weeks ahead as well, with some analysts setting relatively low price targets within the $7,000 region, the worst is $5,000.
This drop could be sparked and perpetuated by a technical breakdown stemming from its ongoing break beneath a key technical level.
This is where a massive amount of support exists, but there are a few other price regions before this level that could bolster BTC.
$5,000
At the time of writing, Bitcoin is trading down just 1% at its current price of $8,850.
Earlier today Bitcoin dipped as low as $8,700 before buyers stepped up and absorbed the immense selling pressure that drove this movement.
As seen on the chart below, Bitcoin’s recent decline below its wide trading range’s equilibrium has opened the gates for a movement to its range lows that sit within the mid-$5,000 region.
Very simple scenario imo – if that is to be another lower high then whats changed from a market structure perspective?
Anticipating price to cycle back to the range lows – 0.618 fib if the high is in here.
Would like to be a buyer again at the range lows. pic.twitter.com/qbh05U3UmX
— TraderXO (@TraderX0X0) May 10, 2020
The analyst’s chart seems to signal that this is where the downtrend will end, as it is a significant demand zone.
It is important to note that there are multiple key support regions prior to this level that could stop Bitcoin from seeing a capitulatory decline.
The “heat” regions seen on the below Bookmap indicate that there is significant BTC buying pressure around the lower-$8,000 region. If this is broken, there is some slight support at $6,500 that could temper the decline.
An image of Bitcoin’s current heat map (via Bookmap)
The support here is rather weak from the looks of it, which means that $8,000 will be the key level that must be defended if bulls want to thwart a decline to $5,000.
$7,000
Jonny Moe (@JonnyMoeTrades) echoed the previously mentioned trader’s sentiment, explaining that a breakdown here could open the gates for a sharp decline to lows in the $7,000 region.
$BTC on the precipice… if this falling wedge holds, we maintain the ascending triangle option.
I’m looking at a failure to send us somewhere in the $7,000s. pic.twitter.com/CR5OsDxYRo
— Jonny Moe (@JonnyMoeTrades) May 26, 2020
How Bitcoin responds to $8,800 in the coming hours should offer significant insight into its mid-term outlook.
Disclaimer: This is not trading advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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