Bitcoin Technical Analysis: BTC Flashes Multiple Sell Signals

Daily Bitcoin BTC Price Analysis

Last Updated July 23rd 2021
2 Min Read
  • Bitcoin price has flipped the parabolic SAR from bullish to bearish.
  • BTC has broken below several key levels.
  • Willy Woo presents a full analysis as to why this dip happened.
  • $7.6 billion in crypto long positions liquidated in one hour this Sunday as the Bitcoin price plunged to $52,000, before improving to $55,300. Prior to this jump, BTC had jumped from $30,300 on January 28 to $63,500 on April 13.

    Bitcoin Price Breaks Below Key Levels

    Since April 14, the price dropped from $63,500 to $55,400, losing almost $8,000 in its overall valuation. In this chart, there are several sell signals:

    • The BTC price has crashed below the long-term upward trending line.
    • The 20-day and 50-day SMAs have flipped from support to resistance.
    • The MACD has flipped from bullish to bearish.
    • The parabolic SAR has reversed from positive to negative.

    Image: BTC/USD daily

    Bitcoin Daily Chart

    Looking at the IOMAP, we can see that the Bitcoin price has a major support wall at $54,500. Previously, at this level, 540,000 addresses had purchased 448,000 BTC tokens. Maybe, this support wall will be robust enough to absorb a lot of selling pressure.

    Image: IntoTheBlock

    Bitcoin Volume Chart

    Willy Woo Breaks Down Why Bitcoin Price Crashed

    As per Willy Woo, the biggest reason why the Bitcoin price collapsed is because of the mining hashrate nearly halving due to the power outage in Xinjiang China.

    “We just saw the single largest 1-day drop in mining hash rate since Nov 2017. The hash rate on the network essentially halved, causing mayhem in BTC price as it crashed.’

    Glassnode Bitcoin Chart

    On April 16, a single address sent 9,000 BTC to Binance. This is probably a whale with ironside knowledge on the happenings in China.

    Glassnode Bitcoin Chart

    This sell down was compounded by sell off of quarterly futures (used by more sophisticated traders) on derivative markets which was already underway as early as 13th April.

    Bitcoin Chart

    “The two combined sell pressures was sufficient to tip the price below liquidation levels ($59k). This triggered a cascade of automatic sell-offs in a chain reaction. $4.9b contracts were liquidated, $9.3b including alt-coin markets. 1m trader accounts liquidated in total.”

    BYBT Bitcoin Chart

    “This dip happened while unprecedented numbers of new users are arriving onto the network per day. There's been a retail influx in the last 2-3 weeks.”

    Glassnode Bitcoin Chart

    Willy Woo ended his thread by pointing out that the Bitcoin price is now flashing a classic “buy-the-dip” signal.

    “The on-chain SOPR metric near a full reset. A classic buy the dip signal. In simple terms, profit taking by longer term investors is completing, very little sell power left unless investors want to sell at a loss from their entry price. Unlikely in a bull market.”

    Glassnode Bitcoin Chart

    Bitcoin Price Is Expected To Reach These Levels

    The $54,500 support line is extremely crucial to prevent a further drop in Bitcoin price. A further crash will take BTC down to $50,000.