The release of data on benign consumer price inflation on August 14 initially served as a catalyst for the growth of the Bitcoin (BTC) rate, causing optimism among investors.
However, this positive sentiment was quickly dashed by several factors, including the transfer of 10,000 BTC worth around $600 million to the Coinbase Prime wallet by US authorities, raising concerns about a possible liquidation and its impact on market prices.
As Bitcoin struggles to stay above $60,000, a crypto analyst has warned that its bearish plunge could have serious implications for the broader crypto market, especially altcoins.
In a message dated August 16, TradeViewanalyst Alan Santana provided a detailed analysis of the current bearish trends in Bitcoin, backed up by key momentum indicators and price movements.
Technical Analysis – Weakening Momentum and Bearish Signals
According to the analysis, the weekly technical chart confirms the bearish sentiment, with Bitcoin trading below key exponential moving averages (EMA 8, 13, and 21).
A bearish crossover between these averages indicates a medium-term downtrend that is gaining strength over time.
The Relative Strength Index (RSI) remains weak and the Moving Average Convergence Divergence (MACD) indicator is trending lower with a red histogram, further signaling weakening momentum.
Bitcoin’s sharp drop after briefly touching $70,000 on July 29, followed by its failure to rebound convincingly, shows the lack of buying pressure in the market. This is further supported by its continued trading below critical support levels, indicating that the bearish trend is deeply entrenched.
On the daily chart, Bitcoin’s failure to break above the ‘super resistance’ level near $60,000, compounded by a downward MACD and declining RSI, suggests further downside is likely.
The bearish crossover of significant moving averages (EMA 8/13/21/34/55/89/144) and the presence of low trading volume indicate a lack of investor confidence, pointing to the possibility of further market decline.
Key resistance and support levels
Santana highlights that Bitcoin is currently facing a critical resistance zone between $60,000 and $61,580, with the “ultra resistance” level marked around $60,717 on the daily chart.
This area has proven to be a difficult barrier to overcome, and Bitcoin has repeatedly failed to break through it in recent weeks.
On the other side, Santana indicates that immediate support for Bitcoin lies around $57,500, a level that has provided temporary relief during recent downturns.
However, the weekly chart shows that a more significant support level lies around $52,351, marked by the confluence of several moving averages.
A break below this level could accelerate the decline, potentially pushing Bitcoin down to the psychological support of $50,000, which could trigger panic selling in the market.
Implications for the Altcoin Market
The broader cryptocurrency market, particularly altcoins, could be significantly impacted by Bitcoin’s ongoing woes. Historically, altcoins tend to experience sharper declines during Bitcoin downturns due to their higher volatility.
If Bitcoin fails to hold above the $57,500 support, the altcoin market could see a more severe correction, with many altcoins potentially losing key support levels.
Bitcoin Price Analysis
Bitcoin is currently trading at $58,501 after significant moves over the past 24 hours. Bearish sentiment is evident on both the daily and weekly timeframes, with Bitcoin down 1.25% and 3.4% respectively.
Investors should exercise caution as Bitcoin’s current technical weakness suggests that the overall market may face significant downside risk.
If Bitcoin falls below critical support levels, a wave of panic selling could begin in the altcoin market, leading to an even sharper decline.
Disclaimer: The content of this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
