Bitcoin price has been falling aggressively since it made a high of $30,515 on April 14, a month ago. Since then, it has broken several support levels and now stands near $27,100. A break below these levels could easily reduce the price to $25,250, its next major support.
We have used technical analysis to check trading opportunities in this current situation. We will also present a view of whether you should be long or short, aggressive or patient when Bitcoin breaks or bounces upwards from these levels.
Bitcoin: Current Situation
The current economic situation has proven bad for cryptocurrencies in several ways. A banking crisis in the USA, effects of economic slowdown in developed countries, rising average transaction fees in Bitcoin, and harsh crypto crackdowns are a few major reasons why the crypto market is in bad shape now.
Further, technical analysis looks more troublesome as Bitcoin is near its bull-market support, below which there might be a serious fall in crypto markets.
Bad Economic Situation in Developed Countries
In Western developed countries, particularly in Europe and Northern America, there have been fears of an economic slowdown coupled with inflation. The International Monetary Fund (IMF) predicts a slowdown in economic growth throughout the world. It expects global GDP growth to slow down from 3.4% in 2022 to 2.8% n 2025.
Coupled with this economic slowdown, there have been a series of banking collapses in the USA. Some major banks that went bankrupt were
- Silvergate Bank
- Silicon Valley Bank
- Signature Bank
- First Republic Bank
All of these banks were associated with the technology market in the USA, which dominates cryptocurrency usage in the world.
Regulatory Crackdown
Several cryptocurrency exchanges fell due to the harsh crackdown on cryptocurrencies throughout the world.
In the USA, Binance, Ripple Labs, and other major organizations fight legal battles in courts. Bittrex, a major crypto exchange, shut down operations in the USA less than two months ago.
Coinbase, one of the largest crypto players, has also halted its operations in the USA.
Other counties, like India, the largest crypto market in terms of users, have also imposed a severe 30% tax on income from crypto. Singapore’s MAS has also become strict on crypto players.
Bitcoin Transaction Fees
The fees for transactions in Bitcoin have risen significantly due to the Bitcoin Ordinals Protocol. It is a protocol similar to Ethereum’s ERC-20 and ERC-721, which lets users mint NFTs and tokens on the Bitcoin chain. The protocol has witnessed massive adoption since Bitcoin is the most trusted cryptocurrency.
In April and May alone, it saw inscriptions(minting) rise from less than 50k total inscriptions to nearly 8 million inscriptions. This has led to a rise in Bitcoin transaction fees. Rising fees are another reason why people are avoiding Bitcoin, at least temporarily.
Technical Analysis
Technically Bitcoin is very close to a phase below which its price may lose all the momentum of the bull market. This support zone can be called bull market support. If Bitcoin price goes below this, it can initiate a downfall towards $25k.
Another reason the price might go down this week is the options expiry on the coming Friday, 20 March 2023.
Analyst Predictions
Benjamin Cowen, Founder, and CEO of Into the Cryptoverse, a crypto analytics firm, showed recently that Bitcoin is at its most critical support.
In a video posted on his YouTube channel, he explained that in history, Bitcoin has never been at the support zone of $25k, which means if the prices fall another 5% or below $25k, Bitcoin might enter another bear market.
But the good news for bulls, according to him, is that the 21-week SMA has not crossed above the 21-week EMA till now. However, that changes today when the 21-week SMA($43,578) exceeds the 21-week EMA($43,522).
Our Analysis
Bitcoin has already slipped $600 in the last hour(at the time of writing) and is trading near $26.4k falling from $27k, a crash below the critical support of $27k.
As per technical charts, the outlook is negative in the near future because:
- RSI is weak and falling.
- MACD shows a negative crossover.
- Trading volumes are very low, which indicates less market participation.
Target and Stoploss
Since the fall in the last hour is massive, there could be a slight rebound, but if the rebound fails to end above $27k, the next price is $25.5k.
Bearish Target:$25.2k
Stoploss: $27k
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
