Fed FOMC notes and Bitcoin ‘bear channel’ could cause a drop to $28K

In early May, weakness in crypto and stock markets continued and at this point there is no evidence of any short-term factors that could reverse the bearish trend.

Equity markets are also in a downtrend and according to for researcher Clara Medalie, the price of shares of companies with exposure to Bitcoin (BTC) has also taken a notable hit.

Bitcoin vs BTC Exposed Companies. Source: Twitter

Medal said:

“Block, Tesla, Microstrategy and Coinbase are down between 20% and 50%.”

Data from Cointelegraph Markets Pro and TradingView shows that an early morning attempt by Bitcoin (BTC) bulls to rise above $39,000 was easily defended by bears, resulting in a dip to the $38,200 level.

BTC/USDT 1-day chart. Source: TradingView

Here’s a look at what various analysts are saying about the current price action and what lower levels to watch in the event of further decline.

More downside until the 200 EMA flips to support

According to independent market analyst Rekt Capital, watching for a close above the 200-day exponential moving average (EMA) is an easy way to assess Bitcoin’s current weakness. The analyst described the statistic as an “indicator of long-term investor sentiment toward Bitcoin.”

BTC/USD 1-day chart. Source: Twitter

Rack Capital said,

“Since mid-2021, BTC has not been able to stay above the black 200-day EMA for too long. Any time BTC broke above the EMA, it would quickly lose it as support and return lower.

$28,000 could be the macro bottom

Understanding what could be coming for BTC price was touched upon by crypto trader and pseudonymous Twitter user “Cantering Clark,” who posted the following chart highlighting the similarities between the current price action and BTC’s price action in July 2021.

BTC/USD 1-day chart. Source: Twitter

Cantering Clark said:

“A similar pattern of strong sell-offs followed by weak attempts to skyrocket, as we saw in July 2021, again after a longer-term sideways streak took shape and lows were favored. Possible fall setup.”

Also veteran trader Peter Brandt shared a similar sentiment, noting that Bitcoin price could plummet to new lows if the current “bear channel” plays out.

BTC/USDT 1-day chart. Source: Twitter

Brandt said:

“The completion of a bear channel usually results in a drop equal to the width of the channel, or in this case a hard test of $32,000 or so — my guess is $28,000.”

Related: Bitcoin ‘Bear Market’ Could Push BTC Price to $25K, Shares Trader Says Due to Capitulation

Long term accumulation continues

Despite the current downtrend, data from glassnode suggests that BTC accumulation continues to increase, a fact highlighted by Twitter account Negentropic.

Bitcoin’s long-term net position change. Source: Twitter

The analysts said:

Panicked short-term holders realized losses as the change in the long-term holder’s net position increased.

The total cryptocurrency market cap now stands at $1.72 trillion and Bitcoin’s dominance is 42.5%.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.

Leave a Reply

Your email address will not be published. Required fields are marked *