Bitcoin isn’t in particularly great shape right now. The currency’s price made a low of $29,000 after dropping straight from its all-time high of $64k in the last few weeks. After that, Bitcoin was back in recovery mode as prices slowly increased to $40k. But Bitcoin is finding it very difficult to move past the 200 daily moving average at $41k. Every time Bitcoin rose to that price, it got rejected and fell sharply. But until yesterday, the support of $36,400 used to hold strong. And as that broke yesterday, Bitcoin slumped to $35k, registering an 8% drop in one day.
Bitcoin recovery stops!
The price crash of Bitcoin started with that one tweet of Elon Musk that Tesla will stop accepting Bitcoin. That was followed by Binance being investigated, China banning Bitcoin and mining, and then crypto transactions worth over $10k being reported to the IRS. All this happened at critical times when the price of Bitcoin was at critical positions and was somehow managing to stay above the supports.
After falling from its all-time high of $64k, Bitcoin didn’t stand still at any strong support. There were so many FUDs that most investors were panic-selling, and we saw a price drop of almost 50% in just a week. And now, all the strong support that helped Bitcoin move back up like the 200 daily MA, or 20 weekly MA has now turned into strong resistances. And it will need incredible volume for Bitcoin to get past these and resume recovery. Funny story: many whales bought billions worth of Bitcoin and are reportedly stalling recovery to complete their buying. And it seems we can expect the price of Bitcoin to move sideways for a few more weeks.
What can we expect in the near term?
The price action of Bitcoin formed an inverse head and shoulder pattern in the day’s chart. But as the price was unable to break through the strong resistance and it fell, the bullish pattern broke down. And the current chart pattern is bearish as analysis suggests that if we are not able to break through the $42k price level in the near term, Bitcoin could visit $30k and lower. But we have one good news: Biden’s $6 trillion stimulus checks and the growing adoption of BTC.
If Bitcoin manages to erase yesterday’s 8% drop and manages to move around $40k when the new $6 trillion stimulus gets announced, then we can see it move past the $42k level pretty easily. This is taking previous price movements of Bitcoin into account as stimulus checks have always been good for it. But I guess whales will try their level best to suppress the price until they have accumulated enough Bitcoins.
What are your thoughts on the recent price drop of Bitcoin? And do you think it will start recovery again after the new stimulus check is released? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Edward Snowden says Bitcoin will benefit from the $6 trillion stimulus.
