BTC Faces Risk as It Approaches Key Support Level (Bitcoin Price Assessment)

Bitcoin faced an unexpected drop from the $29K level, resulting in a significant breach of the essential 100-day and 200-day moving averages. In light of this bearish trend, what is the potential downside for BTC?

Technical Analysis

By Shayan

The Daily Chart

Following the decline from the $29K mark, Bitcoin’s price fell beneath the vital 100-day and 200-day moving averages, finding support at the notable $25K level, where a rebound commenced.

This abrupt upward movement was directly influenced by developments in the SEC-Grayscale case, in which Grayscale achieved a favorable court decision regarding the conversion of GBTC into a Bitcoin ETF.

Nevertheless, this initial recovery was succeeded by a pullback to retest the 200-day moving average, resulting in another sharp downward movement that once again approached the critical support area at $25K.

While this price behavior indicates a strong bearish sentiment in the market, it is crucial to recognize that a possible re-confirmation of support could set the stage for another bullish recovery, potentially leading the market into a consolidation phase. On the other hand, the likelihood of a further decline increases if the price falls below the $25K level.

The 4-Hour Chart

Examining the 4-hour timeframe reveals that the downward trend halted when Bitcoin reached the significant $25K support area, resulting in a brief consolidation marked by low volatility. However, the price saw a sudden increase, highlighted by the emergence of a large green candle.

As the price rose and approached the critical 61.8% Fibonacci level, a key target during market corrections, buying pressure diminished, leading to a reversal. Consequently, Bitcoin entered another sharp retracement, pushing its price back toward the $25K range.

In the coming days, the $25K level acts as a significant psychological support point; should sellers succeed in driving the price below this crucial threshold, the market may experience another rapid decline toward lower price levels.

On-chain Analysis

By Shayan

This chart displays the 14-day moving average applied to the Miner to Exchange Flow metric alongside the variations in Bitcoin’s market price. This distinctive metric serves as an indicator of the volume of coins transferred from miners to exchanges, providing insights into potential selling pressures from miners.

Notably, in recent months, price declines, whether significant or minor, have consistently coincided with periods when miners began transferring their Bitcoin assets to SPOT exchanges.

Recently, a significant development occurred as the metric saw a considerable increase coinciding with Bitcoin’s price reaching the $30K level. Interestingly, this uptick in miner activity contributed to a notable price retracement, bringing Bitcoin’s value down to the $25K mark. Following this, the metric experienced a significant decline, reaching a yearly low.

Nonetheless, this metric is showing signs of a slight recovery, suggesting the possibility of renewed miner activity in the days ahead. Therefore, it would be wise for traders to closely monitor miners’ actions, remaining vigilant for any indications of increased or decreased selling activity, as these behaviors could greatly impact Bitcoin’s short-term direction.

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Cryptocurrency charts by TradingView.