Yesterday’s weekly close of Bitcoin price below $26,000 has raised concerns among analysts and traders. This move could potentially signal further decline for the leading cryptocurrency as it appears to be the first step towards confirming a double top formation on the weekly chart.
Rekt Capital, a prominent figure in the crypto analysis space, shared his findings on Twitter and stated: “BTC has officially closed the weekly close below the support level of around $26,000.” Technically speaking, BTC has started with the first step in the process Validation of this double top formation has begun. Turn $26,000 into new resistance and the breakdown is likely to be confirmed.”
Bitcoin Double Top | Source: X @rektcapital
How low can Bitcoin price fall?
Notably, this is not the first time Rekt Capital has expressed concerns about this price level. Back on August 7, the analyst warned: “If BTC falls to $26,000 by mid-September, a double top could form.” A crash from $26,000 would confirm the double top.”
Rekt Capital delves deeper into possible price movements and speculates that a break of the $26,000 base could cause Bitcoin to fall into the $22,000 region. The analyst emphasized the importance of monitoring price action this week, noting: “If we see a weekly close below $26,000 followed by a rejection at $26,000, then we are likely seeing a confirmation Breakthrough from this dual leadership.”
However, it’s not all doom and gloom. Rekt Capital also pointed out the dangers of being overly pessimistic, advising traders: “That’s why it’s really important not to get caught up in these downside moves (below $26,000).” On the bright side, the analyst points to the opposite Head and shoulders pattern on Bitcoin’s weekly chart that played out in mid-March this year, suggesting that a retest of its neckline around $24,000 could signal the bottom of Bitcoin’s upcoming move.
Decentrader, a crypto intelligence platform, commented on the current market conditions, tweeting: “The market is currently experiencing the most sustained period of #Bitcoin on-chain losses since the bear market lows.” Is this a buying opportunity on a decline or the beginning of a deeper withdrawal?”
They also highlighted potential price moves, stating: “Bitcoin Liquidity Map: There is a significant amount of 3x, 5x and 10x liquidity from $23,500 all the way down to $21,600. IF the price were to actually drop to $23,500, we could see a fairly rapid liquidity escalation event that could quickly drive the price lower.”
Bitcoin liquidity card | Source: DecenTrader
Final correction?
Michaël van de Poppe, another distinguished analyst, provided a comprehensive historical perspective. He emphasized the importance of September as a historically challenging month for Bitcoin, stating: “There is a level that #Bitcoin must hold to avoid a significant crash.” Bitcoin is currently holding on to significant support levels. It’s around the $25,500 mark.”
Van de Poppe delved deeply into the historical and cyclical aspects of Bitcoin’s price movements. He emphasizes that the months of August and September, especially in a year before the halving, have traditionally been difficult for Bitcoin. In August 2015, Bitcoin experienced a significant correction towards the 200-EMA but managed to hold above it. A similar pattern was observed in August 2019, with a significant correction followed by a smaller correction in November 2019.
Van de Poppe drew parallels between the current market cycle and that of 2015, suggesting that the current market could mirror the 2015 cycle given the influx of new institutional participants. If this relationship continues, the current downturn could be the last correction before a possible recovery.
At press time, BTC was trading at $25,692.
BTC Double Top Nearing Confirmation, 1-Week Chart | Source: BTCUSD on TradingView.com
Featured image from iStock, chart from TradingView.com
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