The world’s largest cryptocurrency, Bitcoin, broke below the key psychological level of $20,000 today, sparking fears among investors of a potential market crash. Bitcoin was already at a make-or-break moment, dangerously playing around the 200-day moving average.
Is this the start of the last leg of the bear market? Let’s find out.
Previous Analysis
Bad news hit the market last week and sent Bitcoin crashing to $22k. It was a fairly small crash but resulted in double-digit percentage losses in some altcoins. Despite the fall, Bitcoin remained above the 50, and 200-day moving averages. This was a good sign, showing that the bulls still controlled the market.
However, the intense feeling that the Bitcoin price was being manipulated has only increased in the past few weeks. The erratic movement of Bitcoin has become weird and no longer predictable. The series of negative market-impacting news has begun to render Technical Analysis mute.
Nevertheless, as long as there are charts to analyze, we will analyze them.
On Thursday, March 9, 2023, Bitcoin took another fat dump to the 20k region. This crash almost invalidated the Golden cross that had been formed earlier. Several macro-economic factors may have caused the crash.
Bitcoin Price Next Week
Bitcoin broke below the 200 and 50-day moving averages and currently sits at a dangerous place on the chart. The is next support levels for the asset are $18400, $17800, and finally, $15900. Below this, Bitcoin will be seeing pre-2021 lows.
Bitcoin price action has been playing within this range (blue) since June 2022, and any break above or below the range would confirm either a bull or bear market, respectively.
The case for a Bitcoin bullish move is largely insignificant since the markets are no longer as predictable as before. The bearish narrative, however, is strong. The coming week will be more bearish for Bitcoin since we expect an 8% drop from the current price.
Bearish Catalysts
This crash comes in the wake of Biden increasing capital gains tax from 20% to 40%! This means that you will have to part with almost half of every withdrawal you make from crypto. In addition, Biden also put a 30% tax on Bitcoin and crypto mining operations. Perhaps the largest bearish catalyst was the liquidation of Silvergate Bank, one of the largest crypto-friendly banks in the world. Also, among other bearish news, the New York AG sued KuCoin and declared that Ethereum (ETH) is security – truly terrifying.
DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decisions based solely on what you read here.