Bitcoin Slips Towards Bear Market After Losing These Key Support Levels: Analysts
Can short-term holders keep it together while their BTC struggles to muster any price momentum?
After months of consolidation, Bitcoin’s price has lost key support levels that could signal the start of a new bear market.
While on-chain analysts are sounding the alarm regarding the high-cost basis of new Bitcoin holders, technical analysts note Bitcoin’s low price next to its 200-day SMA.
Is The Bull Market Over?
The 200-day SMA, or “simple moving average,” is a trend line tracking Bitcoin’s average price over the previous 200 days.
Following Bitcoin’s surge to new all-time highs in March, Bitcoin’s price has remained mostly rangebound between $58,000 and $70,000, including a brief crash below to $50,000 in August. This consolidation period has given the 200-day SMA enough time to catch up to, and now surpass the market price.
Verified CryptoQuant author Adel Axel Jr. said the loss of this support “formally indicates a bearish sentiment.”
“Additionally, in recent days, increased leverage has been used on the top three exchanges,” he said over Twitter on Monday. “The nearest support level is the 365-day SMA ($50K).”
Axel Jr. didn’t indicate a bear market had officially started, however: on Sunday, he called Bitcoin’s five-month consolidation since March “healthy” involving no “massive stress-induced panic sells” while most early investors slowly took profits. “realized losses have exceeded profits, which often occurs at the end of a consolidation period,” he added.
Going forward, the analyst agreed that a “double test” near the $50,000 price level would be a “ good scenario .”
Short Term Holders Now Underwater
Looking to on-chain data, lead Glassnode analyst James Check said Sunday that over 80% of short-term Bitcoin holdings are now underwater from when they were last bought. Short-term holders include anyone who bought their coins less than five months ago – a cohort of holders more likely to sell their coins when the market looks shaky.
“This is similar to 2018, 2019, and mid-2021 which signaled many investors were at risk of panicking and precipitating a bearish trend,” Check wrote.
That said, the actual magnitude of these losses is still quite shallow, meaning recent investors may not feel any panic quite yet. “Despite 80% of STH coins being in loss, the magnitude of Unrealised Loss is just 4% of the market cap,” Check continued.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Shiba Inu Community Pushes Token Toward $0,001
Can You Turn $500 Into $500 With These Cryptocurrencies?
215 Arrested in South Korea’s $232M Crypto Scam
South Korean police have arrested 215 people for taking part in a massive crypto fraud scheme
BlackRock Launches BUIDL Fund on 5 Blockchains
BlackRock, the world’s largest asset manager, just took a big step in the crypto world