Bitcoin Price Analysis: BTC Bulls Meets Resistance At The 20-day SMA

Last Updated July 23rd 2021
2 Min Read

Daily Bitcoin BTC Price Forecast
  • The parabolic SAR shows that the current market sentiment is negative.
  • There are two healthy support levels at $46,000 and $48,000.

Between February 22 and February 28, the Bitcoin price dropped from $57,500 to $45,200, losing around $12,500 in overall valuation. Let’s take a closer look with technical analysis.

The Bitcoin Price Hits The Brakes At 20-day SMA

Yesterday, the Bitcoin price jumped from $45,300 to $49,450 and has met resistance at the 20-day SMA. Since then, BTC has dipped to $48,600. The parabolic SAR shows that the current market sentiment is negative. Plus, the relative strength index (RSI) is hovering along the neutral zone, which shows that the buyers have space to grow.

btc/usd daily chart 030221

Image: BTC/USD daily

Bitcoin price faces two healthy support levels at $46,000 and $48,000. As per the IOMAP, the $48,000 level is pretty strong since a million addresses had previously purchased 408,000 BTC tokens.

btc/usd volume chart 030221

Image: IntoTheBlock

BCA Research: Stay Away From Bitcoin

In a recent report, BCA Research has warned investors to “stay away” from Bitcoin. According to a Bloomberg report, environmental, social and governance-focused funds are likely to stay away from Bitcoin firms due to the negative environmental concerns associated with the digital currency. 

The comments by BCA Research come after Bitcoin dropped from a record high of $58,350 to $48,000 levels. As Bitcoin recovers from its losses, observations pertaining to the longer-term outlook of the flagship currency have come to light. BCA Research has commented on the future of Bitcoin, citing environmental issues and regulation as key obstacles. 

The sheer amount of energy needed to mine Bitcoin and the prospect that governments will create more obstacles for the largest cryptocurrency point to the token losing “most of its value over time.”

As a result of the vast amount of energy required to mine Bitcoin, the asset’s price increase also signifies an increase in the energy required. Tesla’s recent $1.5 billion Bitcoin investment has been criticized for its seeming contradiction with the firm’s environmental stance. 

Apart from citing environmental concerns, BCA Research Chief Global Strategist, Peter Berezin, said that the expense and slowness of Bitcoin transactions make the asset “unsuitable as a medium of exchange”. He added:

Many companies have cozied up to Bitcoin in order to associate themselves with the digital currency’s technological mystique. As ESG funds start to flee Bitcoin, its price will begin a downward spiral. Stay away.

Data Shows Bitcoin Price Bulls Cycle Not Over

After reaching an all-time high of $58,330.57 on February 21, Bitcoin’s price dipped down to $46,000 levels recently. This sudden correction has seemingly made many feel that Bitcoin’s bull run has come to an end. However, data suggests otherwise.

Rekt Capital recently suggested that we are still early in the ongoing bull cycle. Based on the pattern that Bitcoin had been following over the last two cycles, it does appear that the price target is somewhere around $180,000. 

In a blog post, Glassnode co-founders also shared their analysis to explain why the current Bitcoin run still has room for growth. As per their observations, retail investors are largely driving Bitcoin’s rally since mid-December 2020 while institutions have been acquiring the coins as soon the price has dipped even a little. In fact, MicroStrategy has taken advantage of the recent dip to buy an additional billion dollars worth of Bitcoin. 

Glassnode said: 

Currently, the short term consolidation is really healthy and increases the chances for a higher global top. As new purchases have a higher cost basis in a fomo environment, no one will sell at a loss.

Long-term Bitcoin holders appear to be less worried about this correction than the last one, which took the coin from $42k to $29k. According to various indicators, these holders are not reducing their positions any time soon. Additionally, according to the co-founders, institutions will keep coming in to diversify their holdings, giving several robust support levels to the price. 

For all those that ask themselves who would possibly buy so many bitcoins at these price levels, its important to understand how these large firms function under the hood and manage risk. Counterintuitively, for many of them, a $40k bitcoin is more attractive than an unproven $8k bitcoin.

Bitcoin Price Is Expected To Reach These Levels

Bitcoin price will like face correction and go to the $48,000 level before bouncing back up.