Bitcoin Analysis

Complicated start to the week that has left us with generalized bearish movements in the market that have caused the breakdown of the support zones in most of the tokens including $BTC and $ETH, which closed on Monday with a result of -16% .

The week was marked on the calendar by the announcement of interest rates last Wednesday by the FOMC in which a rise of +0.50% was expected, but it was finally +0.75%. Both the rise and Jerome Powell’s subsequent speech generated volatility in the crypto market, but the price of $BTC remained in the range in which it was involved after the fall, between $23k and $20k.

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On the other hand the dominance of BTC (BTC.D) has rebounded strongly from resistance at 48-49%, generating a move down to 45%. This zone acted as resistance in May and could be its first support zone. It seems likely it could go to test the 44% or 42% zone as a “retest” to the broken trend line.

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This bearish movement of the dominance of BTC is due to the fact that while the price of $BTC fell, it did so in a higher percentage than the average of the rest of the market. While it has shown a lateralization zone, we have seen some tokens that generated a reversal movement that brought them closer to a positive weekly close, as is the case of $KDA which is approaching +10% or $EGLD which could close with its first positive week since the end of March.

Regarding our weekly analysis, today I want to focus on $BTC and what it could have in store for us after the latest move.

If we start with the long term, BTC is dragging a downtrend in place since November that has been pronounced during the beginning of the week with that break of the $26k-$28k support, thus breaking the confirmed fractal of the long term uptrend.

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A bearish sub-trend has also been generated since April which may be tracing a bearish channel (remember that this figure is typical in bearish trends, but usually breaks to the upside, leading to the creation of a new trend or in this case to a possible support to the main trend line). 

This channel is not yet confirmed as there is only a bounce at the bottom, but it is a scenario to consider if there are more rejections from the lower part of the channel.

On the other hand, if we expand the image to a 1h frametime, we can see that range between 20k and 23k, in which the price oscillated during the week and the new low generated yesterday breaking that support at $20k.

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On this scale we can also identify another bearish channel of smaller range, which may be guiding the price during the next few days.

Although these channels usually break to the upside, we cannot rule out downward movements below this range, if there is an increase in volatility.

What we can expect for the next few weeks if we go back to the long term chart. We see how the price has not made any pullback to the broken support zone (26k-28k), so in the medium term it would be a logical selling zone if that support starts to act as resistance. But we are still a long way from that area and it is a move I would not contemplate until a reversal occurs which would be confirmed with a high above $23k.

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On the other hand, I have plotted a Fibonacci extension to the downward movement and we see how we are at the 0.786 level and that coincides with the resistance zone of late 2017, which managed to break at the end of 2020.

This area can exercise as support, but for this it is necessary to see rejection candles in this area, which could lead us to that pullback that I commented above, but if the price fails to reject and continues to leave new lows, the next target of the downward movement is at $12k-$13k.

Finally, remember that nothing discussed in our articles can be considered as investment advice, everyone must do their own analysis and develop their own trading strategy. From the Belobaba Crypto Fund team, we only show our analysis and investment tools and how they help us in our operations when making decisions.