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Bitcoin’s drop in price to key USD 9,000 support could jeopardize the upward trend

June 13, 2020

The Bitcoin (BTC) price failed to break the resistance zone at $ 10,000 and corrected almost 10% in one day. The decline occurred on the same day as the US stock markets. was a major setback. According to Coinmarketcap, Bitcoin’s market capitalization is currently $ 174,002,630,178.

These movements led investors and traders to fear that this correlation would continue. However, is the fear that Bitcoin’s price will continue to decline if the stocks are correct, is it justified, or did Bitcoin’s price correction come to $ 10,000 after multiple rejections?

Daily performance of the crypto market

Bitcoin’s drop in price to key USD 9,000 support could jeopardize the upward trendBitcoin’s drop in price to key USD 9,000 support could jeopardize the upward trend

Daily performance of the crypto market. Source: Coin360

The $ 10,000 rejection forces the price of Bitcoin to lower support levels

BTC USD 1-day chart

1-day chart for the BTC / USD pair. Source: TradingView

The BTC / USD pair’s daily chart shows a clear rejection of the USD 10,000 resistanceAfter that there was a significant decline.

However, the primary trend is still valid and can be classified as an upward trend. The simple reasoning is as follows Bitcoin’s price has peaked since the big drop on March 12 when it reached $ 3,700.

The uptrend is signaled by higher lows and support / resistance reversals. In this case, the recent low is the $ 8,600 level. In order for the market to hold, it is important to maintain the upward momentum through another higher low above $ 8,600..

In this phase, The main area to be serviced is between USD 9,050 and USD 9,300, since it already served as support after last autumn.

This is important in that it is a crucial area that has provided a lot of basic evidence over the past year. For example, The $ 9,050 to $ 9,300 range provided support between July and September 2019.

XBT USD 1-day chart

1-day chart for the XBT / USD pair. Source: TradingView

In this sense, The green zone between $ 9,050 and $ 9,300 can be marked as crucial for the direction. If the price of Bitcoin falls below the green zone and confirms this as resistance (due to a decline in rejection), the market should see a longer decline towards the USD 7,000 area.

However, If the price holds this area as support, it should show a bullish continuation.

What caused the USD 800 decline?

BTC USD 4 hour chart

4-hour chart for the BTC / USD pair. Source: TradingView

The 4-hour diagram clearly shows what happened last autumn. Bitcoin’s price was in a very narrow range, which means that such compression usually ends in volatility.

Generally, a “forgery” occurs at the end of the compression period before the actual movement occurs.

The 4-hour diagram shows that Bitcoin’s price tried to surpass $ 9,850, but was immediately declined at $ 10,000what caused the price drop.

The price fell below $ 9,850 and, more importantly, the recent support at $ 9,700. Long position traders had positioned their stop loss below the previous support and when the stops were reached the downward movement started to accelerate through a chain reaction in which only the first large support level can prevent a price drop, as this is the level that traders want to withdraw.

In the fall of this year, the $ 9,050 to $ 9,150 range was the main area to be serviced.

The total market capitalization remains above the moving average of 100 and 200 days

Cryptocurrency with total market capitalization 1-day chart

Total market capitalization chart for one day. Source: TradingView

The total market capitalization for crypto is still on the uptrend And above all, it is above the moving average of 100 and 200 days.

Preferably, the green zone must remain a support, but a wick toward $ 240,000 million is possible. As long as the $ 240 to $ 245 billion zone remains a support, a further increase is expected and the next resistance zone points to $ 310-325 billion.

If support of $ 240 billion is lost, a crucial test could be made for the $ 220 to $ 225 billion zone. In this scenario, the last resort would be to see the 100- and 200-day MA as support.

Bullish scenario

BTC USD 4-hour bullish scenario

BTC USD 4-hour bullish scenario. Source: TradingView

The 4-hour chart shows a clear bullish momentum structure. Support at $ 9,050 to $ 9,200 must be maintained, and although a potential wick from $ 8,850 to $ 8,900 could occur, a daily close above $ 9,050 to $ 9,200 is preferable.

In this sense, Another test of the lows can occur to create bullish divergences or a double lows. After that, it is important to regain $ 9,300 for further stimulus.

After all, breaking out of the $ 9,500 to $ 9,550 range is the final crucial part. If Bitcoin’s price can overcome this resistance, a new test of zones from $ 10,000 to $ 10,500 is likely to begin..

This resistance has been tested many times and is even more likely to move towards $ 12,000 once the resistance breaks.

Bearish scenario

BTC USD 4-hour bearish scenario

Bearish scenario of the BTC / USD pair for 4 hours. Source: TradingView

The bearish scenario is clear and simple. The main point of this scenario is the range from $ 9,050 to $ 9,300 A loss in this area could indicate further downward momentum.

But what should traders pay attention to on the bearish stage? First, A rejection in the range of $ 9,600 to $ 9,700 could indicate a downward test of the support zones from $ 9,050 to $ 9,200.

The more you test support from $ 9,050 to $ 9,200, the weaker it gets when buyers run out.

In this situation, any bearish test and rejection could be a sign of a potential short chance and further downward momentum if the Bitcoin price drops to $ 9,600 to $ 9,700 and loses $ 9,050 to $ 9,200 in support.

If the Bitcoin price is declined at $ 9,600 to $ 9,700 and you lose $ 9,050 to $ 9,200 in support, Any declining test and rejection could be a sign of a potential short chance and further downward momentum.

In that regard The loss from $ 9,050 to $ 9,200 could mean a more significant correction for the cryptocurrency markets Zones from $ 7,500 to $ 7,800 are the first mass support zones to test.

This does not mean that investors should and should expect the crypto bear market to continue We have to remember that the price of Bitcoin has recovered massively since the fall of March 12th.

A correction of 25-30% is healthy and not unnatural in a market that is in an upward trend.

The views, thoughts and opinions expressed here are exclusively from the author and do not necessarily reflect or represent Cointelegraph’s views and opinions. Every step of investment and trading involves risks. You should do your own research when making a decision.

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