Bitcoin Slips Into Bear Market After Missing These Key Support Levels – Analysts

After months of consolidation, Bitcoin price has lost key support levels that could signal the start of a new bear market.

While chain analysts are sounding the alarm on the basis of high costs for new Bitcoin holders, technical analysts point to Bitcoin’s low price next to its 200-day SMA.

Is the bull market over?

The 200-day SMA, or “simple moving average,” is a trendline that follows the average price of Bitcoin over the previous 200 days.

After Bitcoin’s surge to new all-time highs in March, Bitcoin’s price has mostly remained between $58,000 and $70,000, including a brief dip below $50,000 in August. This period of consolidation has given the 200-day SMA enough time to catch up and outperform the market price.

CryptoQuant’s verified author Adel Axel Jr. said the loss of this support “formally indicates bearish sentiment.”

“Furthermore, in recent days, greater leverage has been used across the three major exchanges,” he said he said Monday on Twitter. “The nearest support level is the 365-day SMA ($50,000).”

Axel Jr. did not indicate that a bear market had officially begun, but: Sunday, he called out Bitcoin’s five-month consolidation since March is “healthy” not involving “massive stress-induced panic selling,” while most early investors took profits slowly. “Realized losses have exceeded profits, which often happens at the end of a consolidation period,” he added.

Looking ahead, the analyst agreed that a “double test” near the $50,000 price level would be a “good scenario.”

Short-term headlines now underwater

Regarding on-chain data, Glassnode principal analyst James Check said on Sunday that more than 80% of short-term Bitcoin holdings are now under water since they were last purchased. Short-term holders include anyone who bought their coins less than five months ago, a cohort of holders more likely to sell their coins when the market appears unstable.

“This is similar to 2018, 2019 and mid-2021, which indicated that many investors were at risk of panicking and precipitating a bearish trend,” Check wrote.

That said, the actual magnitude of these losses is still fairly shallow, which means recent investors may not be panicking just yet. “Although 80% of STH coins are in loss, the magnitude of the unrealized loss is only 4% of the market cap,” Check continued.

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