The price of Bitcoin (BTC) is falling through support. What does it mean? Reason(s) to be concerned?
Let’s first review what is happening, before we look into the question what it means.
Essentially, the Bitcoin chart has 3 major support (trend) lines:
- The red trend line (lowest of the 3 on below chart) represents the uptrend that started in the summer of 2016.
- The trend line in the middle represents the uptrend that started early 2017.
- The highest (transparent red) represents the strong uptrend that started last April when the whole crypto space exploded.
Moreover, to make things more complicated, there is horizontal support which, arguably, is even more important:
- The $7000 area is the low of February this year. It is important that a correction dips above a previous low.
- The $5000 area is the high of last summer. It is much more important that a correction remains above a previous high.
What does all this mean?
It means that Bitcoin should continue to trade above $7000 to remain in a strong cryptocurrency bull market, which, if it does, will likely mean that the next cycle higher will start around summer time.
If $7000 gives away it is really crucial that the $5000 level is respected. If not, it does NOT imply that the bull market is over, but it would imply that repair time will be longer, and, arguably, the next cycle up will only start late this year.
In case $5000 does not hold, then the lower support levels are $3000 and $1500. Even if Bitcoin would fall to those price levels it would still remain in a long term bull market. However, repair time will be really long, arguably 12 to 18 months, in which case we would be in a 2014-alike scenario when Bitcoin crashed, took more than a year to stabilize and started rising again 1.5 year later.
For now, we are closely watching how and when Bitcoin will dip. It will be the basis for our forecast on when crypto prices and blockchain stocks will start rising again.
Are we concerned? Not at all at this point, on the contrary, we are waiting to fire buy alerts but need to see first where and when Bitcoin will dip.
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