Last week, the stock market experienced the worst week in 12 years and when this crisis took place, the cryptocurrency market was also affected.
Bitcoin and the cryptocurrency market have also seen a significant sell-off this week, and this is a relatively reasonable result when people sell their assets out of fear of potential economic instability. Other safe haven assets like gold and silver also saw a major sell-off on Friday.
Will the cryptocurrency market find support in the coming weeks, or will the downtrend continue?
Overview of the crypto market on 1/3 | Source: Coin360
Selloff will take place after Bitcoin loses important support at $ 9,400
Bitcoin price has found resistance at $ 10,400, and a move to $ 9,400 is essential. However, if the $ 9,400 level cannot provide sustained support and let the bears break through it, this will trigger a major sell-off in the cryptocurrency market.
Daily BTC / USD chart | Source: TradingView
The sell-off will push Bitcoin price to the next support zone at $ 8,200-8,400 and multiple horizontal support levels are lined up here, which will also provide temporary support and create space for a rally. aid.
However, in the short term, many people believe that the momentum of the increase has weakened because Bitcoin price is constantly falling to a lower level (a key indicator of the downward momentum) on the daily time frame.
So does this mean that the entire cryptocurrency market will reverse the process and enter a downtrend? Uhm … Nothing. Bitcoin's price has remained 27% higher since January 1, making Bitcoin one of the best performing assets this year.
The weekly chart focuses on the 21-week MA
Weekly BTC / USD chart | Source: TradingView
The BTC price on the weekly chart is currently resting on an interesting MA line, namely the 21-week MA line. The previous rally has held this line as a support to create a peak in December 2017, which makes it a stimulating indicator for the bulls if they hold it.
If prices can find support at this level, then the upside momentum will continue in the coming period.
Weekly BTC / USD chart | Source: TradingView
The weekly chart also clearly shows a massive sell-off in the past week. However, it is currently located on a potential support area. Combined by the $ 8,400 support level and 21-week MA line, and there could be a relief rally here.
In order to maintain the momentum of growth, Bitcoin must break through the recently created high of $ 10,400. However, the market must find support before these levels are brought into the target.
If the price of Bitcoin cannot find support at $ 8,400, then the next level is found in the zone of $ 7,500 – $ 7,700.
Total market capitalization is seeking support
Chart of weekly total crypto market capitalization | Source: TradingView
The total market capitalization of the cryptocurrency has not been able to break above the $ 300 billion zone, nor could it find support at the $ 250 billion zone, so further downward is expected.
Currently, it is also approaching a stimulus level as the 21-week MA also shows the same thing on this chart.
During the entire 2016-2017 growth cycle, the 21-week MA provided support for the overall market capitalization. When total market capitalization finds support, the correction may be over.
Beyond the 21-week MA, an important horizontal support is also seen here. In 2018 and 2019, market capitalization has repeatedly found support at $ 225 billion. This support display will allow the market to continue its uptrend, as the total market capitalization has created a higher bottom since creating a bottom in December 2018.
Has altcoin nearly reached the bottom yet?
Chart of weekly altcoin market capitalization | Source: TradingView
Altcoin market capitalization also shows a similar outlook to the rest of the market. There is a large denial at the horizontal level at $ 115 billion, through which altcoins are also in the process of seeking support.
The next strong support level is found around $ 73-75 billion, equivalent to $ 225 billion of total market capitalization. Since the bottom in December 2018, altcoins have consistently reached higher lows, ensuring a new uptrend will occur. If the market finds support around $ 73 billion, it will guarantee a higher low, and the uptrend will resume.
Price increase scenario for Bitcoin
If the scenario turns bullish, a relief rally to $ 9,200-9,400 will be the first step. To do this, the Bitcoin price needs to find support at $ 8,250- $ 8,400 to maintain the momentum, and retest the previous support levels (now turned into resistance).
BTC / USD chart of Bullish scenario in 12 hour frame | Source: TradingView
The key question that investors will ask is: Can Bitcoin price overcome resistance and continue its uptrend? If the answer is no, then it can retest the area of $ 8,200- $ 8,400 again.
However, if the price breaks out of the $ 9,200 – $ 9,400 resistance level and turns it into support, it will open the door to the next levels, near the high of $ 10,400 two weeks ago.
And finally, finding support around this area will confirm the 21-week MA line into support once again, which is a stimulating indicator for the rally and could help Bitcoin reach a higher peak in time. next.
Discount script for Bitcoin
BTC / USD chart of Bearish scenario with 4 hours / Source: TradingView
There are no clear guidelines for the price reduction scenario at the moment, but the chart is showing some perspectives. What traders should look for is a potential price drop test. If the price of Bitcoin rebounds without being supported by strong momentum, and is rejected at $ 8,950 or even $ 9,175, a market decline will begin.
If this happens, the price will probably retest the support around $ 8,200- $ 8,400 again.
However, this support level is checked many times will weaken its strength. And once the bears seize this support, the price will continue falling to the next support found at the $ 7,500 – $ 7,700 zone, which is the next major support area after the current support.
Bitcoin price today | Source: Coinmarketcap
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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