Bitcoin remained depressed through the late European session and dropped to a new weekly low—around $29,156—in the last hour.
Bullish traders are now attempting to limit the benchmark cryptocurrency’s decline to deeper levels. For now, they have found a long-term support level at the BTC/USD’s 50-day moving average wave.
Meanwhile, bears want to drag the pair further down towards the lower descending trendline support of the Falling Channel pattern. Bitcoin has been fluctuating inside it since its first sell-off from its record high levels near $42,000.
The Falling Channel’s support target almost confluences with the 0.5 Fibonacci retracement line (~$22,801) of the graph between $4,857-swing low and $41,986-swing high. The sequence of supports and resistances have been accurate so far in predicting ideal long/short opportunities.
Bitcoin 4H Chart
Meanwhile, technical indicators on Bitcoin’s four-hour (4H) chart have alerted about further negative trends in the market. The primary among all is a death cross.
On Wednesday, Bitcoin’s 20-period moving average closed below its 200-period moving average, leading to the formation of a bearish MA crossover. Traders interpret it as a signal to enter new short positions.
An extended correction, further strengthened by the death cross pattern, risks sending Bitcoin to as low as $22,000. Nevertheless, the cryptocurrency expects to hold the $27,000-30,000 area owing to factors outside the technical indicators’ purview.
They concern a provable institutional demand near the $30,000-level. Data from Glassnode earlier showed that mainstream investors bought Bitcoin en masse near the said price range. It means they would want to protect the floor long-term.
“Bitcoin is seeing the largest depletion of liquidity in years. Not only are funds being withdrawn from exchanges, but coins are continuously moving to strong hands. In the past 30 days, around 270,000 BTC moved to entities considered HODLers.Glassnode tweeted on January 21.
That said, Bitcoin could go as far as $27,000 but for a pullback, not an extended correction. The cryptocurrency’s growing demand against inflation risks serves as one of the major catalysts behind institutional demand.