Bitcoin (BTC) is currently facing challenges as it struggles to avoid further losses. The cryptocurrency has been trading sideways for an extended period, but this stability may soon come to an end.
According to data from Cointelegraph Markets Pro and TradingView, BTC’s price action has been constrained by resistance above $30,000, making it increasingly unstable. On August 16, the release of the latest Federal Reserve minutes intensified bearish sentiment, causing a drop in buy-side interest and pushing BTC/USD to near two-month lows at $28,300.
Although the drop was relatively small in terms of U.S. dollars, it was significant given the narrow trading range that has been in place since June. Consequently, traders and analysts are now preparing for further support retests, potentially revisiting levels not seen since earlier this year.
Bitcoin market observers have their eyes on major long-term trend lines, particularly the 200-day and 200-week simple moving averages (SMAs), which could determine the fate of BTC. James Straten, a research and data analyst at CryptoSlate, considers these lines in the sand for bullish prospects. He tweeted that the 200-day SMA support level is at $27,250, while the 200-week SMA support level is at $27,320.
The 200-week SMA has historically served as a crucial support line during downward pressure on Bitcoin’s price. Losing this support is often associated with the bottom of bear markets. However, in 2022, Bitcoin experienced its longest-ever period below the 200-week SMA. This month, analysts predicted that holding the key trend line would be a significant factor in flipping the market into a “full bull” phase next month.
The current Bitcoin spot price range gains further significance when considering various support trend lines, including both simple and exponential moving averages (MAs). These trend lines form a cluster between $27,000 and $28,600, providing additional support for BTC’s price. As of the August 17 daily candle, the short-term 100-day SMA is being tested as support.
Another crucial psychological support level is $28,000, which remains intact in the eyes of the market. Market participants, like popular trader CryptoCon, believe that there is little need to worry about a significant crash beyond this level as other bullish supports should hold against bears.
CryptoCon drew a historical comparison to BTC’s price in 2015-2016 when the market was on the brink of a bull run that eventually led to the previous cycle’s peak at $20,000. He emphasized the importance of enduring sideways movements and drops during that period and highlighted that Bitcoin continued to rally. This suggests that despite the current retracement, the market remains in a bullish phase.
It is important to note that this article does not provide investment advice. While BTC faces potential support retests and instability, every investment decision should be based on individual research and analysis. Traders and investors should consider the risks involved in the market.