A easing jump in the Bitcoin market on Thursday did little to offset its prevailing correction bias, as its price fell within a critical support area.
The BTC / USD exchange rate hit an intraday low of $ 45,000 during the start of Friday’s Asian trading session, down by 22.90 percent from its record set earlier this week. Traders maintained the $ 45,000 and levels around them as support, given the track’s historically verified ability to limit downward corrections.
Bitcoin support confluence
However, the most recent negative move seemed much stronger, increasing the chances that bitcoin will further extend its decline.
“[I’m] keep an eye on the $ 44,000 – tested once, but a break below will likely drop the price to $ 40,000, ”alarms Josh Rager, co-founder of BlockRoots.com. “And if the price reaches $ 40,000 – you know it will fall between $ 30,000. [It] could jump here – but it will increase level by level / day by day. “
Bitcoin fell more than 22 percent of its record. Source: BTCUSD at TradingView.com
Rager’s $ 40,000 down target converged well with the blue wave in the chart above.
It represents the simple 50-period moving average (50-SMA) on the Bitcoin daily chart. The wave sustained the bullish trend of the cryptocurrency throughout 2020. Many cases showed the price breaking below the 50-SMA, but only to recover the wave later to confirm the market’s upward bias.
The analyst Willy Woo’s floor model – which has no evidence of turning false – also warns of rigid price support near $ 39,000. Mr. Rager agreed that Bitcoin could drop to $ 40,000 in the next few sessions, while forming a wick for $ 38,000-39,000. The cryptocurrency may resume its bullish trend at a later stage.
Psychological price floors
Bitcoin rose almost 100 percent in 2021 to reach a record high above $ 58,000. His earnings appeared in growing institutional adoption, led by Tesla’s $ 1.5 billion investment in cryptocurrency and its intentions to use the decentralized token as a means of payment for its services and products.
This week, the mobile payment app Square announced that it has also increased its Bitcoin reserves by investing another $ 170 million in the cryptocurrency. The company headed by Jack Dorsey added $ 50 million in bitcoins to its balance sheet last year.
Nasdaq-listed business intelligence firm MicroStrategy also received a similar but intensified call to increase its exposure to bitcoin. It invested $ 1.06 billion to buy another stock of digital assets, bringing its total reserves from about 71,000 BTC to more than $ 90,500 BTC.
Square has 5% of its balance in bitcoin.
Tesla has 8% of its balance in bitcoin.
Microstrategy has 95% + of its balance in bitcoin.
Who is next?
– Pomp 🌪 (@APompliano) February 24, 2021
All companies revealed the average rates at which they bought Bitcoin. For Tesla, it was between $ 35,000- $ 40,000. MicroStrategy’s latest investment in the Bitcoin market came when it was trading above $ 52,000. Meanwhile, Square said it bought the cryptocurrency for an average price of just over $ 51,000.
This also increased Bitcoin’s ability to recover levels above $ 50,000 over the next few sessions, given the high profile exposure of corporations in the cryptocurrency above those levels.