Bitcoin Price Falling Below $7,700 Could Spell Disaster for Bulls
All hands on deck, the Bitcoin (BTC) price is approaching a key level.
On Sunday, the cryptocurrency market began to trend lower, with bulls failing to step in to facilitate a strong weekly close. While Bitcoin has remained relatively steady, it is currently trading decisively under the key $8,000 support level, changing hands for $7,850 on most exchanges.
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This move brings BTC to a mere two or three percentage points above $7,700. Here’s why this is important.
Bitcoin Now At Key Price Level
When Bitcoin precipitously fell off the $10,000 cliff when Bakkt launched on September 23rd, the bearish price action stopped at one level: $7,700.
This is for good reason. As industry investor and analyst Crypto Neko recently pointed out, $7,700 acts as local historical support — Bitcoin bottomed at that level during the run-up earlier this year.
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$BTC Macro View
This is why the macro view is so important
– Local Support (LS) at 7700– If we break I can easily see 6s as we fill the gap between supports– What is concerning is the 6k region was not resistance going up, so can it truly be considered support? pic.twitter.com/ozGaIz06P5
— NekoZ (@CryptoNekoZ) October 7, 2019
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That’s not all. Per previous reports from NewsBTC, the one-week SuperTrend indicator’s baseline — a level which BTC never closed under during 2017’s bull run — sits at $7,800.
And, there exists a confluence of integral support levels around the high-$7,000s. These include but aren’t limited to the 200-day moving average; the 365-day exponential moving average, a level that Bitcoin bounced straight off of during mid-2017; the 50-week exponential moving average, among other levels that many say are indicative of Bitcoin’s medium-term trends.
Considering the historical and technical importance of $7,700 — or at least the confluence of moving averages and trend lines currently sitting at this price point — a strong move lower from here could mark the start of an even greater, drawn-out correction, one that analysts have proposed may last until Q1 of 2020.
Related Reading: Institutions Long on Bitcoin as Analysts Expect Upward Price Breakout
At the very least, analysts have said that the loss of $7,700 could lead to a rapid drop to the low-$6,000s — where it is believed that Bitcoin’s next key historical support level lies.
Can Bulls Save Crypto?
This may leave you wondering — can bulls save the cryptocurrency market from falling off an even steeper cliff?
According to a number of analysts, maybe not. Brave New Coin’s Josh Olsezwicz recently noted that Bitcoin is only 20% from the one-day Kijun line of the Ichimoku Cloud, which is still far away from the historical reversal point of 35% to 60% off the Kijun.
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price 20% off from the kijun here
35-60% off has been the historical reversal point
6.5k is 35% from kijun pic.twitter.com/cf1ThB4sZ9
— Josh Olszewicz (@CarpeNoctom) October 6, 2019
There are some promising signs, though.
According to a recent Commitments of Traders report shared by trader Romano, traders that identify as either “asset managers” or “institutions” are currently 69.31% long on the CME’s Bitcoin futures, and 30.69% short by the number of contracts open. With Romano claimed that institutions “have a good track record for the right directional trade”, it could be implied that this subset of BTC investors are expecting bulls in the cryptocurrency market to soon return.
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So as always, financial markets are a game of odds. And right now, it seems that the odds are slightly favoring the bears.
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