The relief rebound in the Bitcoin market on Thursday did not offset its general correction bias as the price fell within the key support area.
Earlier in the Asian trading session on Friday, the BTC/USD exchange rate hit an intraday low of US$45,000, down as much as 22.90% from the record high set earlier this week. Given that this range has historically been proven to limit downside corrections, traders maintained support at the level of 45,000 USD and its vicinity.
Bitcoin supports confluence
Nonetheless, the latest downtrend seems to be stronger, which increases the likelihood that Bitcoin will push its decline further down.
“[I’m] Josh Rager, the co-founder of BlockRoots.com, said in shock: “Keep watching the price of $444,000. The price has been tested once, but if it falls below that level, the price may fall back to 40,000 US dollars.”; “If the price drops to 40,000 US dollars, you will know that this will be absorbed in the mid-range above 30,000 US dollars. [It] It may rebound here-but it will rise day by day. “
Mr. Rager’s downside target price is $40,000, which fits well with the blue wave in the above chart.
It represents the 50-period simple moving average (50-SMA) on the daily chart of Bitcoin. This wave supports the upward trend of cryptocurrencies throughout 2020. Many instances showed that the price fell below the 50-SMA, but only later withdrew the wave to confirm the bullish bias in the market.
Analyst Willy Woo’s lower bound model (with little false evidence) also warns of firm price support near $39,000. Mr. Rager agreed that Bitcoin may fall to US$40,000 in the next trading day, and at the same time it will develop towards US$38,000-39,000. Cryptocurrency may resume its upward trend at a later stage.
Psychological price floor
Bitcoin rose by nearly 100% in 2021, setting a new all-time high above $58,000. Tesla invested 1.5 billion U.S. dollars in cryptocurrency and intends to use decentralized tokens as a payment method for its services and products, which has driven the continuous growth of the organization.
This week, mobile payment application Square announced that it has also increased its Bitcoin reserves by investing another $170 million in cryptocurrencies. At the end of last year, the company led by Jack Dorsey added $50 million worth of Bitcoin to its balance sheet.
MicroStrategy, a business intelligence company listed on the Nasdaq, has also adopted a similar but strong appeal to increase its exposure to Bitcoin. It invested US$1.06 billion to purchase another part of digital assets, pushing its total reserves from approximately 71,000 BTC to more than 90,500 BTC.
5% of Square’s balance sheet is Bitcoin.
8% of Tesla’s balance sheet is Bitcoin.
More than 95% of the micro-strategy’s balance sheet is Bitcoin.
who is the next?
— Pomp🌪 (@APompliano) February 24, 2021
All companies disclosed the average price at which they bought Bitcoin. For Tesla, the price is between US$35,000 and US$40,000. MicroStrategy’s latest investment in the Bitcoin market was reached when its transaction price exceeded $52,000. At the same time, Square stated that it bought the cryptocurrency at an average price of slightly more than $51,000.
Given that the company’s popularity in cryptocurrencies is higher than the above-mentioned level, this also increases Bitcoin’s ability to recover above $50,000 in the next few trading days.