This week, the stock markets experienced their worst week in 12 years and, at the time of this collapse, the crypto market also suffered a blow.
Bitcoin (BTC) and the cryptocurrency market experienced a significant sale this week and this result is relatively reasonable given that people are selling their assets for fear of potential economic instability. On Friday, other safe havens like gold and silver also saw a massive sale.
Will crypto markets find support in the coming weeks, or will we see a continued downward trend in momentum?
Daily performance of the crypto market. Source: Coin360
Sale follows after Bitcoin lost key support at $ 9,400
The price of Bitcoin found resistance at the $ 10,400 level, after which a support test of $ 9,400 was badly needed. The level of $ 9,400 has not been able to provide lasting support and, as the price has dropped, this has caused a massive sale throughout the crypto market.
USD BTC daily chart. Source: TradingView
The sale led to the next support area at $ 8,200 to $ 8,400 and many horizontal levels line up here, offering potential temporary support and space for a rescue rally.
However, in the short term, many believe that the upward momentum is out of the market as the price of Bitcoin makes a lower lows (a key indicator of the downward momentum) over the daily period.
Does this mean that the entire crypto market will reverse the course and enter a bearish trend? Not at all. The price of Bitcoin is still 27% higher than on January 1, making Bitcoin one of the best performing assets of the year.
Weekly chart highlights 21-week AD
1 week BTC USD chart. Source: TradingView
The weekly chart is currently based on an exciting MA (moving average), namely the 21-week MA. The previous bullish cycle maintained this level as support for the December 2017 bullish peak, which makes it an interesting indicator for bulls.
If the price could find support at this level, it could mean a continuation of the upward momentum in the coming period.
1 week BTC USD chart. Source: TradingView
The weekly chart also clearly shows last week’s massive sales. However, it is currently based on potential support. Maintaining the green zone around $ 8,400 would align with 21-WMA and possibly grant a rescue rally.
For sustained upward momentum, it is crucial that a breakthrough from the peak of the past at $ 10,400 occur, but such a decision could take some time. The market must find support before it can target these levels.
If the price of Bitcoin cannot be catered for at $ 8,400, the next level to target is from $ 7,500 to $ 7,700.
Total market capitalization is looking for support
Total market capitalization cryptocurrency graph. Source: TradingView
The total market capitalization of cryptocurrencies could not exceed $ 300 billion nor could it find support at $ 250 billion, so further downward momentum was expected.
Currently, an exciting level is approaching, as 21-WMA also appears on this chart. Throughout the 2016-2017 bull cycle, 21-WMA provided support for the total market capitalization as a whole. Providing support in this area would give bulls arguments for an upward dynamic.
Aside from 21-WMA, a crucial horizontal level can be seen here. In 2018 and 2019, market capitalization found support at $ 225 billion on several occasions. Showing support here would allow the upside to continue, as total market capitalization had registered higher lows since the December 2018 low.
Are altcoins about to succeed?
Altcoin cryptocurrency total market capitalization graph. Source: TradingView
Altcoin’s market capitalization presents prospects similar to those of the rest of the market. There has been a massive horizontal rejection at $ 115 billion, through which the altcoins are also seeking support.
The next significant level is around $ 73 billion to $ 75 billion, which is similar to the $ 225 billion total market capitalization. Since the low of December 2018, altcoins have constantly increased their lows, which justifies a new upward trend. Finding support around the $ 73 billion level would justify a further weaker and upward potential hike.
The bullish scenario for Bitcoin
If the scenario becomes bullish, a rescue rally towards $ 9,200 to $ 9,400 would be the first step. To do this, the price of Bitcoin must find support at $ 8,250 – $ 8,400 in order to maintain an upward momentum to retest the previous support levels for resistance.
BTC USD 12-hour bullish scenario graph. Source: TradingView
The next important question investors will ask themselves will be: Can the price of Bitcoin break resistance and continue its upward momentum? If the answer is no, a new probable test of the zone from $ 8,200 to $ 8,400 is coming.
However, breaking the resistance around $ 9,200 – $ 9,400 and supporting it would open the door to a move to the next levels near the highs of $ 10,400 two weeks ago.
And finally, finding support in this area would confirm that the 21-WMA is supported again, which is a massive indicator of the up / down momentum.
The bearish scenario for Bitcoin
4 hour BTC USD chart. Source: TradingView
There is no clear guideline for a bearish scenario at this point, but the graph shows several perspectives. What traders should look for are potential bearish retests. If the price of Bitcoin goes up without any volume and rejects at $ 8,950 or even $ 9,175, a new bearish test is confirmed, and the price should continue to fall.
If such a bearish test occurs, the price will likely retest the support around $ 8,200 – $ 8,400 once again.
However, the more the support is tested, the weaker it becomes. Further intensive testing of this support would generally lead to a further decline to $ 7,500 – $ 7,700 as the next main support after this zone.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Each investment and trading movement involves risks. You have to do your own research when you make a decision.
