Bitcoin Technical Analysis: Bulls wary of repeated rejections at key level
Daily Bitcoin BTC Price Analysis
- The price is struggling to break above the $24,000 resistance line.
- The $23,000 and $22,500 support lines are holding up the price.
This Sunday, BTC had its first bearish day after eight consecutive bullish sessions. As of now, the buyers are struggling to go past the $24,000 level. It looks like the sellers have identified $24,000 as a sell-off point. However, the buyers still appear resilient.
$24,000 resistance line stops upward move
Along with price stopping at the $24,000 line, the relative strength index (RSI) is also hovering around the overbought zone. All this does indicate that we may be on the verge of a slight correction before BTC continues its upward movement.
Image: BTC/USD daily
If the price does correct, what are the downside targets you should be aware of? For that, let’s checkout IntoTheBlock’s IOMAP. It looks like the price is sitting on top of two strong support levels at $23,000 and $22,500. These two levels appear healthy enough to absorb a considerable amount of selling pressure.
A break below these two support walls takes the premier cryptocurrency down to the 20-day SMA at ($20,200). Looking at the 4-hour chart, we can see that the MACD is trending deep in the red zone. This indicates that the market momentum is getting increasingly bearish. This solidifies our short-term bearish outlook.
Image: BTC/USD 4-hour
It looks like Coinbase’s CEO is also wary about Bitcoin’s price action.
Coinbase CEO issues warning
After starting the week at $19,000, Bitcoin has surged by about 30%, moving past the $24,000 mark. Amid the coin’s impressive performance, Coinbase CEO Brian Armstrong has warned people about the "risk" of investing in cryptocurrencies such as Bitcoin.
In a recent blog post, Armstrong wrote:
While it’s great to see market rallies and see news organizations turn attention to this emerging asset class in a new way, we cannot emphasize enough how important it is to understand that investing in crypto is not without risk.
The CEO published the blog just before Coinbase announced that it has filed for a long-awaited initial public offering (IPO) with the US Securities and Exchange Commission (SEC). Armstrong added:
Crypto can be a volatile asset class. Often more so than the types of traditional financial instruments that most investors are used to. For example, this means that the market can move in either direction much faster than equity markets.
Bitcoin’s price has been moving upwards in recent times as multiple high-profile investors named BTC a potential hedge against inflation. Armstrong commented on the coin’s unstable price movement in 2017 where it climbed from under 1,000 at the beginning of the year to around $20,000 only to crash back to $3,000 in 2018.
We’ll occasionally see strong market rallies where prices will rise quickly and aggressively. While we’re always excited to see increased interest in crypto, it’s also important to point out that this is not only a time of high volumes, but also price volatility.
Despite these warnings, the cryptocurrency community has been celebrating the flagship coin’s price movement. According to a Forbes report, Ian Balina, the chief executive of Token Metrics, said that Bitcoin will hit “$50,000 within the next few years."
Investment Bank endorses Bitcoin
Jefferies, an investment bank that has $50 billion in assets under management (AUM), now holds Bitcoin in its long-only portfolio for pension funds. As per a Trustnodes report, Christopher Wood, the Global Head of Equity Strategy at Jefferies, said:
This is the year bitcoin has become investible for institutions with custodian arrangements available and with prominent investors and indeed institutional investors declaring that they have bought it.
Bitcoin has now become part of the system with opportunities also for retail investors to buy into it via quoted vehicles.
Jefferies was reportedly impressed by MicroStrategy’s massive Bitcoin investment. The bank acted as the sole manager of the $650 million convertible offerings by MicroStrategy. Wood said that he was persuaded by Michael Saylor, MicroStrategy’s CEO, arguing that BTC is “destroying gold’s value proposition” because the coin has “dematerialized gold.” Wood admitted that this narrative has some merit.
Jefferies’ very conservative portfolio earlier had 70% allocated to gold or gold stocks and 30% to Asian equities (excluding Japan). Now it is 45% for physical gold, 20% for gold stocks, 30% equities and 5% Bitcoin.
Key price levels to watch
With Bitcoin going through a short-term correction, the key levels to watch for are the $23,000 and $22,500 support lines. If the price breaks further below, the 20-day SMA at ($20,200) must hold strong.