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Bitcoin Technical Analysis: BTC Breaks Below Key Level

5 Min Read
Last Updated March 27th 2021

Daily Bitcoin BTC Price Analysis

  • The market momentum is about to reverse from bullish to bearish in the 4-hour chart.
  • The 20-day SMA in the daily chart has been flipped from support to resistance.

The bears took a major victory this Tuesday by breaking the Bitcoin price below the 20-day SMA. The premier cryptocurrency is presently trending a little below $36,000. Let’s take a closer look with technical analysis.

 

BTC Trends Below $36,000

After dropping from the $38,500 level, BTC has been trending horizontally around $36,000 for the last 4 days. During this horizontal movement, the Bitcoin price managed to flip the 20-day SMA from support to resistance.

btc/usd daily chart 012021

Image: BTC/USD daily

If you check IntoTheBlock’s IOMAP, you can see why this was a major win for the bears. The 20-day SMA coincides with the $36,000 resistance barrier. Previously at this level, 688,000 addresses had purchased 303,000 BTC tokens. 

Beyond this, the next strong barrier lies at $38,500. At this level, 553,000 addresses had purchased 330,000 BTC tokens. If the Bitcoin price somehow breaks above the 20-day SMA, they will have a huge obstacle at $38,500.

btc/usd volume chart 012021

Image: IntoTheBlock

The 4-hour chart adds further credence to our overall bearish outlook. Firstly, the moving average convergence/divergence (MACD) is about to shift from green to red. Secondly, the 50-bar SMA has crossed over the 20-bar SMA to form the bearish cross pattern.

btc/usd 4-hour chart 012021

Image: BTC/USD 4-hour

These indicators tell us that the overall sentiment in the 4-hour timeframe is negative, and one could expect a further price drop.

 

Grayscale Raises $700M In Just 24 Hours

Asset management giant Grayscale Investments has recently raised over $700 million within a span of 24 hours. The company’s CEO Michael Sonnenshein took to Twitter to confirm the news. 

"Yesterday, @Grayscale raised north of $700 million into its family of products...momentum from Q4 seems to picking [sic] up speed into the new year."

Sonnenshein noted that this is a significant milestone as it indicates a growing interest among institutional investors in diversifying their investments by choosing digital assets other than Bitcoin. According to Grayscale's 2020 Q4 report, the quarter has been incredibly prosperous for the company, with a total of $3.3 billion in investments recorded across several products. 

Additionally, Grayscale’s digital large-cap fund had an average weekly investment of $1.6 million. The Grayscale products excluding the Bitcoin trust witnessed an average weekly investment of $33.6 million in the fourth quarter.

Eric Balchunas, a senior ETF analyst at Bloomberg, compared Grayscale as the "ARK" of cryptocurrencies. He outlined the similarities between the two entities. 

"The similarities are pretty amazing. I think both hung in relative oblivion for 3-4 yrs, had like $2b 12mo ago ago and then boom, 10x increase. Both defy trends: ARK w stock picking and grayscale w very high fees and 20%+ premiums.”

ARK Investment Management’s flagship offering is the ARK Innovation ETF (ARKK). Over the past year, ARKK has returned over 171%, with its total assets under management (AUM) increasing tenfold to $21.8 billion. 

On the contrary Sonnenshein’s views, the CEO of New York Digital Investment Group (NYDIG), Robert Gutmann, said that out of the last 100 conversations that NYDIG has had with investors, all of them “have been about bitcoin and 0% of them have been about any other crypto asset.” 

 

Jonathan Ruffer: Bitcoin Is A “Unique Beast”

In a recent investment review, Jonathan Ruffer, chair of the investment management firm Ruffer, shared his views on Bitcoin. Calling the asset a “unique beast,” Ruffer said that the flagship coin is increasingly challenging gold as an asset. 

Bitcoin is a unique beast as an emerging store of value, blending some of the benefits of technology and gold. [Bitcoin is] becoming a challenger to gold’s standing as the one supra-currency. 

Ruffer had previously revealed details of its own Bitcoin investment. In December, the company spent $744 million on BTC, representing 2.7% of its total assets under management (AUM) -  $27.3 billion. Investing in Bitcoin was a drastic step for Ruffer as board members deliberated carefully on the investment. 

In this month’s review, Jonathan Ruffer stated that the firm has become “nervously satisfied” that BTC has an important role to play in its activities. The chair noted that like gold, Bitcoin is an investment for when the USD and other fiat currencies are “kerplunked” -  when the value of these currencies plummet due to inflation.

 

Bitcoin Price Is Expected To Reach These Levels

If the out hypothesis is correct, then we can expect a price drop to the $34,000 psychological level. A further break below that could be catastrophic since it will take BTC to the 50-day SMA ($27,600).

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