Bitcoin falls below $33K. Where next?
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As Bitcoin inches closer to $30,000, a bounce could be ahead. But hurdles remain that could block a real recovery.
Bitcoin bears took out a major support zone of $35,000 during the weekend without any bounce back. This opened the way toward $33,000, this year’s low. Bitcoin (BTC) had dropped to $32,650 at the time of writing.
Is this a good time to hop in?
Technical analysis shows we could see the price recover
In 2022 so far, Bitcoin traded in an ascending triangle pattern, which consists of rising lows and flat highs. This is a bullish pattern where chances are high that the break will happen on the upside.
In late March, Bitcoin pushed past its resistance zone of $45,000 but failed to hold above the price. This turned it into a fake breakout, and the price quickly returned to within the triangle.
Source: StockCharts.comSince the break above $45,000, BTC has been trading within a descending channel. This is a bullish pattern where the break has a higher chance of happening on the upside. Currently, the price hovers around the bottom trend line. If the pattern holds true, the price should bounce and at least try to reclaim $35,000 in the next few days.
Fundamentals still weigh down the price
Even though the technical analysis shows a potential recovery in the days to come, the fundamentals are still bearish. This includes high inflation and the Fed’s attempt to curb it, the uncertainty with the war in Ukraine and escalating COVID numbers in China.
Rising interest rates and tightening monetary policies are the factors that weigh down riskier assets the most. This makes borrowing money more expensive, which makes it less likely that crypto and growth stocks move higher.
Until the inflation numbers go down and the Fed at least stops tightening the monetary policy, Bitcoin will face downward pressure and likely move sideways in the best-case scenario.
Bitcoin must rally above $35,000 and hold
The technical analysis of the longer time frames shows indecisiveness. It all depends on what Bitcoin does in the short term. For the long-term bull run to continue, Bitcoin must reclaim $35,000 and hold. If it goes above $37,500, even better.
A move lower within the next week or two to $30,000 or even slightly below will turn all long-term indicators bearish. If that happens, BTC trading at $21,000 could be a possibility within the next few months.
Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.
Kliment Dukovski owns cryptocurrencies as of the publishing date.