Bitcoin, Cryptocurrency

If Bitcoin breaches this critical level, be careful

The latest crypto crash is additional evidence of this sector’s volatility.

Acknowledging cryptocurrency’s history, a 30% drop is relatively mild. Bitcoin (BTC), for example, has plummeted by more than 80% on three different times since 2012.

Bitcoin has then encountered several abrupt drops. So this recent crash is par for the course; there will possibly be many more crashes like this in the future.

Bitcoin is attempting to stabilize after being cut in half from April’s $64,800 high. The cryptocurrency sank to about $30,000 intraday last Wednesday — a critical support area that must endure. What are the technicals projecting?

Let’s examine a weekly closing chart. Twice, BTC advanced from large rounding bases. From a $10,000 low in September, Bitcoin soared to $60,000 just six months later. But one time it crossed $57,000 in February, BTC earnings were less and more challenging to reach.

bitcoin price

That slowdown created a bearish “wedge” formation—where each new high was a smaller percentage higher than the prior high was above its previous high. With the price action starting to fade, it will be a good move to put a closing stop-loss order at $51,000. On Sunday night, Bitcoin was trading around $35,200.

The second chart is a daily chart, illustrating in bigger detail the current halving. Here you can see just how significant the $30,000 support zone is. It rests on a trendline that dates back to January. It was the last pullback area from which Bitcoin began its final approach to new highs.

bitcoin price

Meantime, daily momentum has now reached its most oversold reading since the March 2020 $4,000 bottom.

With drive at extreme oversold levels now, just as Bitcoin retreated to a vital and essential support area, we would look for prices to begin a period of backing and filling between $30,000-$50,000. But if for any reason Bitcoin’s critical $30,000 support were breached, it would be vulnerable to decline back to $20,000.

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