Last month, I gave readers my Bitcoin analysis and highlighted key levels. At that time, Bitcoin was testing a key resistance zone and after weeks of futile attempts to break through, the sellers piled in. There was one key breakdown of critical support which then turned my mood bearish. This is the chart and projection from that article:
Simple and clean technicals. After a failed attempt to breakout, Bitcoin broke below $30,000 support taking out a previous higher low adding more confluence to downside risk. In that article, I stated that Bitcoin would need to fail its retest, meaning Bitcoin would need to close above $30,000 to nullify the breakdown technicals.
As you can see from the most recent chart above, Bitcoin failed to retake $30,000. The top cryptocurrency saw multiple retest attempts but the sellers continued to beat out the bulls. All retests were sold off. And then we finally got the breakdown below recent lows at $28,800.
The catalyst? Take your pick. Some crypto analysts say it is because of a risk off move seeing global markets sell off over concerns of China’s economy and fears that US interest rates will remain higher for longer.
But some analysts are attributing this move to a Wall Street Journal Report that Elon Musk’s SpaceX has sold its bitcoin holdings after writing the value down by $373 million. Elon Musk is quite influential among crypto traders and investors. Those may remember the Doge tweets, but bitcoin and ethereum prices tend to move in response to his tweets.
The SpaceX news turned to be an immediate catalyst for the price of bitcoin, but there are other concerns for the crypto market:
“The big concern right now is that this might be a frontrun on the outcome of Grayscale’s lawsuit against the SEC; optimism on that front has been keeping markets inflated above whether they might otherwise be for much of the summer,” Edwards said.
So what comes next for bitcoin? I have stated in the past that bitcoin tends to act as a risk on asset. Meaning it moves up alongside the stock market. When we have a risk off environment resulting in fear and a stock market sell off, bitcoin tends to do the same. If stock markets are to drift lower, then we should expect bitcoin to head lower.
$27,200 is resistance and the next support level comes in at the $24,600 level.
Let’s zoom out and take a look at the weekly chart:
From this weekly chart perspective, bitcoin’s new uptrend remains intact after it confirmed a reversal with a breakout above the $24,700 level back in March 2023. This is the level that is about to be tested, and a breakdown below this would put a large dent in the current long term uptrend. This means bitcoin is approaching and about to test a critical support level. As I stated above, with stock market weakness expected, bitcoin will follow.