bitcoin-18-05-2022

Bitcoin: The battle for the $30,000 continues

The Bitcoin price (BTC) cannot stabilize above the 30,000 US dollar mark for the time being and follows the Nasdaq technology index in its movements. Find out which reasons speak for and against a bottom formation in the price analysis.

Bitcoin (BTC): Sideways phase around 30,000 USD continues
BTC price: 29,220 USD (previous day: 30,137 USD)

Short-term resistances/targets: 30,612 USD, 31,433 USD, 32,205 USD, 33,097 USD, 33,714 USD, 34,748 USD,35,464 USD, 36,587 USD, 37,452 USD, 38,250 USD, 39,322 USD,39,854 USD,40,019 USD, 40,851 USD, 41,183 USD

Short-term supports: 29,256 USD, 28,810 USD, 27,696 USD, 26,170 USD, 25,342 USD, 23,887 USD, 21,892 USD, 19,884 USD

BTCUSD_2022-05-18
Source:Coinbase

Reasons for the continuing weakness of the bitcoin price

The uncertainty in the crypto market is also reflected in the Bitcoin price this week. Although Bitcoin is trading in the USD 30,000 range again after its interim drop to USD 25,352, a sustainable bottom has not been seen so far.

Continuing weak signals in the US technology index Nasdaq have so far prevented a recovery movement back towards USD 33,000.

The latest announcements by various central banks to raise interest rates more than expected continue to weigh on the global financial markets in this trading week.
Also the seasonality currently speaks against a sustainable recovery movement in the summer months.

Since the traditional financial market historically tends to be weak between May and September and Bitcoin currently has a very high correlation with the stock indices, this seasonal underperformance could also extend to the crypto market.

Reasons for Bitcoin to bottom

As long as the “golden pocket” at USD 26,170 is not undercut per hourly close, this area is still considered a strong support.

While the Fear and Greed Index continues to index strong fear among investors with a reading below 10, in the past this “panic level” has often been a good time for prices to rise in subsequent trading weeks.
The continued uncertainty among investors is also reflected in a significant increase in Bitcoin dominance. The cryptocurrency’s market power increased by more than eight percentage points in the last 10 trading days to currently 44.6 percent.

Further, the oversold conditions in the U.S. equity indices also point to the increased likelihood of a relief rally.

Since technical indicators in Bitcoin continue to show oversold status in the major timeframes as well, positive news should quickly lead to a recovery move.
Bitcoin’s corrective move produced seven consecutive weekly red candles, not since 2015 has there been such a long price correction. This also increases the probability of a short-term recovery rally in the coming trading weeks.

Since the put/call ratio, which contrasts the amount of short and long bets, also formed a new 12-month high today (Wednesday), it should be increasingly worthwhile for market makers to move the bitcoin price north again to shave short positions.

Bullish scenario (BTC)

After forming a new progression low at USD 25,352 in the previous week, the bitcoin price can continue to stabilize above USD 28,810 as mentioned in the last price analysis.

Even a short dip to the 61 Fibonacci retracement of the current trend movement at 27,696 USD does not invalidate the bullish scenario of a recovery rally towards 33,097 USD.

However, only if the bulls also manage to regain the multiple resistance of 23 Fibonacci retracement, upper Bollinger band, horizontal resist and EMA200 in the area of 30,612 USD, the weekly high at 31,433 USD comes back into view. With this, the buy side would have decided a first important liberation blow for itself.

If Bitcoin can then also leave this price level behind on the hourly closing price, a directional decision for the coming trading days will be made in the area between 32,205 USD and 33,097 USD.
As in the previous week’s analysis, this area continues to represent the maximum short-term upward target.

More upside potential towards 35,000 USD

If the bull camp subsequently succeeds in also overcoming this strong resistance area, as well as immediately breaking through the slight resistance at USD 33,714, the mark around USD 34,748 comes into focus as a medium-term upward target.

Here, investors are likely to realize profits first. If there is no strong price setback and Bitcoin stabilizes above 33,097 USD, a recovery movement to the horizontal resistance at 35,464 USD can be expected for the coming trading weeks. In the first attempt, the bulls will fail here.

Only if this resistance level is also dynamically exceeded, a breakout in the direction of the upper edge of the green resistance zone at 36,587 USD is conceivable. Then, the chance of a retest of the demolition edge in the area of 37,452 USD increases noticeably. In the near future, a recapture of this resistance level is not to be planned.

Only if this price mark is recaptured and subsequently the overriding downward trend line at 38,250 USD can be broken through, the bulls should target the next overriding price target at 39,322 USD.

Here, the 61 Fibonacci retracement of the overriding downward movement runs.

Between 39,322 USD and 40,019 USD, the recovery movement should increasingly stall.

Furthermore, a dynamic recapture of the 40.019 USD is not to be expected. At most, a spike to the maximum bullish price target at 40,851 USD would be conceivable.

Bearish scenario (BTC)

The bears successfully prevented a price jump back above the upper edge of the turquoise trading range in the last trading days. Several times, the BTC price bounced off the EMA200 towards the south.
Thus, the sellers continue to have the rudder firmly in their hands.

Should Bitcoin break back below USD29,256 in the coming trading hours and also undercut the support level at USD28,810 per hourly closing price, a drop to USD27,696 is to be planned. At this cross support from horizontal support and 61 Fibonacci retracement of the last price movement, a preliminary decision is expected.

If this support is breached at the hourly close, Bitcoin is likely to be immediately pushed through in the direction of 26,170 USD. This price level should be seen as the last potential reversal level. If the bulls remain abstinent here as well, a retest of the previous week’s low is inevitable.

Statistically, the bitcoin price should then also produce a lower low. If no countermovement starts in the area of the psychologically important 25,000 USD mark either, the sell-off will extend to at least 23,887 USD. This support level is taken from the daily chart.

This also noticeably increases the probability of a correction extension. Bitcoin could fall back to 21,892 USD in the first attempt. Although the bulls are expected to fight back again here, the proximity to the old all-time high from 2017 at USD 19,881 also increases the chance of a retest of the breakout level from December 2020.

Disclaimer: The price estimates presented on this page do not represent buy or sell recommendations. They are merely an assessment by the analyst.

Picture by Pixabay