Amidst the weekly candle close, Bitcoin’s situation continues to be bearish, following a considerable lack of demand in the market and the macro event.
The price has recently plummeted towards the critical support level at $18K. Will the bears eventually break down the key level, or is bullish correction inbound?
The Daily Chart
The price of BTC has experienced another significant decline of roughly 8% in 24 hours after breaking below the 50-day moving average line and a retest of it to confirm as support turned resistance.
The level mentioned above of $18K has substantially supported the price over the last few months. Considering the increased bearish momentum, there is a high chance of a breakdown.
Something important to note is that the 100-day and the 50-day moving averages are about to print a bearish cross. Such a cross is a lagging indicator; however, this won’t contribute to the already bearish sentiment.
The 4-Hour Chart
On the 4-hour chart, the price has recently broken down a rising wedge pattern (textbook bearish). However, it is expected that BTC will form a pullback and retest the lower boundary of the wedge, approximately $21K, to confirm the breakdown.
The current bullish divergence between the price and the RSI indicator demonstrates the concept. Considering the divergence and the essence of forming a pullback, the price will likely experience a short-term correction towards the $21K level before a possible bearish continuation towards the mentioned $18K support.
On-chain Analysis: Bitcoin Funding Rates
The Perpetual Futures market plays a significant role in determining the short-term price action of Bitcoin. Hence, it can be helpful to evaluate the futures market sentiment. BTC Funding Rate is one of the most popular metrics for achieving this goal.
The Funding Rates indicate whether the majority of futures traders are bullish or bearish on the future of Bitcoin’s price. Negative values point to bearish market sentiment, and on the contrary, positive values indicate bullish sentiment.
Currently, the funding rates have turned negative once again as the price dropped from the $24K resistance level. It’s worth pointing out that the futures market expects Bitcoin to break below this level and potentially make a new lower low. The resulting selling pressure could make the price do so, however, the market tends to reverse when the funding rates are extremely high or low.
This metric should be monitored closely in the short-term as extreme negative values boost the probability of a short-squeeze and could indicate that the bottom is close, similar to last year’s $30K bottom.
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Cryptocurrency charts by TradingView.