Bitcoin (BTC) Drops 7%, Why Recent Breakdown Could Gather Momentum

Bitcoin (BTC) Drops 7% | Photo by Yiğit Ali Atasoy on Unsplash

Bitcoin price is down over 7% and traded below $24,000. BTC/USD dived below $22,000 and there could be more losses in the near term.

Bitcoin Price Takes Hit

This week, bitcoin price attempted an upside break above the $24,500 and $25,000 resistance levels. However, the BTC/USD pair failed to gain pace for a move above the $25,000 level and started a fresh decline.

There was a clear move below the $24,200 and $24,000 levels. The price declined sharply below the $23,450 level and the 50 simple moving average (4-hours, blue). The decline gained pace after the price traded below a key bullish trend line with support at $23,200 on the 4-hours chart.

Bitcoin 4-hours chart | Source: BTCUSD on TradingView.com

Finally, the price tested the $21,250 support zone. A low is formed near $21,235 and the price is now consolidating losses. Besides, the price settled well below the $23,400 zone and the 50 simple moving average (4-hours, blue).

On the upside, an immediate resistance is near the $22,175 level. It is near the 23.6% Fib retracement level of the recent decline from the $25,205 swing high to $21,235 low.

The next key resistance might be near the $22,420 level. A clear move above the $22,500 resistance could send the price towards the $23,220 resistance. It is near the 50% Fib retracement level of the recent decline from the $25,205 swing high to $21,235 low.

Any more gains might set the pace for a move towards the $24,000 resistance zone and the 50 simple moving average (4-hours, blue). If not, bitcoin price might resume its decline below the $21,500 level.

The first major support is near the $21,250 and $21,200 levels. The main breakdown support sits at $20,800, below which the price could take a hit and accelerate lower. In the stated case, the price may perhaps test the $20,000 support.

Overall, bitcoin price is down over 7% in a day and traded below the $22,000 support. If the bears remain in action, there is a risk of a move towards the $20,000 support. Conversely, the price might start a steady increase towards the $23,200 resistance zone.