Following a strong sell-off last week, Bitcoin price has now fallen ~ 40% from its peak. Before the news coming out of China, Visionary Financial was focusing on key support levels last week and outlined a scenario where Bitcoin could experience a strong sell-off. With prices now hovering around $37,500, what key levels will traders and investors be watching to assess short-term sentiment?
At the time of this report, Bitcoin is currently trading at $37,632. The largest cryptocurrency by market cap tanked ~ 8.5% on Friday after news broke on China continuing to crack down on Bitcoin mining. Sentiment going into Friday was already weak, given the fact the U.S Treasury Department stated on Thursday that they would be cracking down on transaction reporting ( crypto transfers of more than $10,000 ). This would be facilitated to deflect tax evasion and other criminal activities the government thinks crypto assets are involved in. As of Friday, Bitcoin’s recent sell-offs positioned it ~ 40% from its peak.
Aside from the core fundamentals, Visionary Financial had outlined the bearish case for Bitcoin on 5/16. At the time of the report, Bitcoin was trading at $46,978. Based on the technicals at the time, there was strong evidence pointing to a sharp drawdown. It was noted that Bitcoin price could fall to ~ $38,500 levels If key support was rejected. This came to fruition and more…
— VF (@VisionaryFinanc) May 17, 2021
Bitcoin Technical Analysis Moving Forward
Following the crazy price action last week, investors and traders are still trying to assess the shorter-term sentiment. Based on the updated chart below, Bitcoins ROC ( rate of change ) indicator hit the lowest level in over a year. As mentioned before, ROC is a great indicator used to assess momentum/sentiment. We finally started to see ROC change direction, which could be a bullish indicator. It is important to note that this in itself can not be used to solely assess sentiment. We continue to focus on key support and resistance levels.
As of now, $39,000 appears to be a relatively strong resistance level. If Bitcoin price can hover back above $39,000, the digital asset could start to experience an influx of risk capital. At this point, bulls could start to push it higher. Given the uncertainty in the market right now, we continue to have a bearish outlook until $39,000 resistance is slashed. Right now Bitcoin is eyeing $32,700 support unless resistance is conquered. If we do see BTC back above $39,000, bulls could be in a position to push it to $44,800 resistance.
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