Watch These Key Bitcoin Price Levels as Investors Abandon Risk-On Assets

Bitcoin Suffers Its Biggest Weekly Drop Since November 2022

Source: TradingView.com

Important points

The Bitcoin sell-off continued over the weekend, with the cryptocurrency down nearly 15% last week. That was the biggest seven-day decline since the collapse of failed cryptocurrency exchange FTX in November 2022. The sharp decline spilled over into Monday’s Asian session, pushing Bitcoin to its lowest level since February.

Bitcoin liquidations have reached nearly $200 million in the past two days, the highest level since early July.

The cryptocurrency’s price broke out of a wedge formation early in the Monday Asian trading session, signaling lower prices.

Bitcoin’s price is likely to gain traction at key chart levels such as $56,000, $47,000, $40,000 and $35,000.

The Bitcoin (BTC) sell-off continued over the weekend, with the cryptocurrency down nearly 15% last week. That was its biggest seven-day decline since the collapse of failed cryptocurrency exchange FTX in November 2022. The sharp decline spilled over into Monday’s Asian session, pushing Bitcoin to its lowest level since February.

The digital asset has come under pressure in the past week as investors have shied away from risky investments amid rising tensions in the Middle East and employment data suggesting the U.S. economy could slow more than previously thought.

On the trading front, crypto analytics site Coinglass showed that nearly $200 million in liquidations for long positions in Bitcoin were seen in the past two days, the most since early July. This has added further downward pressure as brokerages have been forced to close overly leveraged trades stemming from recent price swings.

Below, we take a closer look at the chart of the traditional cryptocurrency and use technical analysis to identify key price levels that could come into play during the ongoing sell-off.

Departure from the Wedge Pattern

Since peaking in mid-March, the leading cryptocurrency has fluctuated within a wedge-like pattern, a chart formation consisting of two converging trendlines connecting a series of lower highs and higher lows. Typically, a wedge represents consolidation in the price of an asset before a trending move in the direction of an eventual breakout.

Indeed, the price broke below the pattern’s lower trendline early on Monday’s Asian session, a move that could lead to further declines in the week ahead. Furthermore, the 50-day moving average is poised to cross below the 200-day moving average to form an ominous death cross, a signal that predicts lower prices.

Watch These Key Chart Levels Amid More Selling

As the sell-off in Bitcoin continues, investors should keep a close eye on four areas on the chart that are likely to remain in focus.

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First, it is worth watching whether the bulls can defend the lower trendline of the wedge pattern, currently around $56,000. A daily reversal to reclaim this level on Monday could signal a possible bear trap.

However, a decisive break below this volume-supported pattern could result in a drop to $47,000, a position where the price could encounter support near the January peak that formed as part of Bitcoin’s trending move between September 2023 and March of this year on the chart.

Continued selling could see the price drop back to $40,000, where buyers could look for an entry point near the significant January lows.

Finally, a larger sell-off could trigger a drop to $35,000, with the cryptocurrency likely finding support from the period of price consolidation experienced between late October and mid-November last year, during which the price broke above the 200-day MA.

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