An unexpected rise in inflation sent US 10-year bond yields rocketing higher, ending the day back up at 5%. AI stocks continued to rise relatively unperturbed but Bitcoin is still desperately trying to hold on to the last support of $73,800. Is it about to go over the precipice?
Bitcoin breakout one way or the other
Source: TradingView
The short-term chart illustrates how weak Bitcoin is currently. Lower highs and lower lows continue to be made. As a comparison, AI stocks were slammed down over a period of about a week, but the last few days have seen them recover significantly. Perhaps traders are expecting the AI trade to turn bullish again. You cannot say that for Bitcoin. Every surge turns into an eventual sell-off, and the $BTC price goes lower than when the surge began.
The above chart shows that the $BTC price is just about hanging on to support. Also, a descending trendline is managing to hold up the price if it falls below. If one draws another trendline from the last high a descending wedge pattern emerges. It can be seen that the $BTC price is flirting with a breakout to the upside currently. It will break out of this one way or the other on Wednesday, or Thursday at the latest. Generally these patterns do tend to break to the upside, but with the weakness displayed so far, the bearish case must be acknowledged.
A great place for a bounce
Source: TradingView
The daily chart really impresses on the viewer that if the $BTC price is going to recover, it is from here that this is going to take place. Yes, another grey swan could crash the stock market, spike the bond yields, and send oil rocketing skyward, which would probably have the effect of collapsing the $BTC price down to the bull market trendline, but if this doesn’t happen, this is a great place for a bounce. The 200-day simple moving average (SMA) can be an excellent support, although the bulls will not want to see this moving average bend to the downside.
Bulls need to get the $BTC price back above the 50-week SMA
Source: TradingView
The weekly chart shows the bulls what they must do in order to turn this current downtrend around. Primarily this is to carry on holding the strong $73,800 horizontal support, but in particular, to get back above the 50-week SMA. After having broken above it, and knowing that this moving average generally supports the entire bull market, preventing a weekly confirmation candle from closing below is imperative for the bulls.
Futures markets are riding high on Wednesday morning. This potentially heralds a good day for US stocks and particularly the AI trade. The Bitcoin bulls will need to take full advantage of what could be a benign day, and start putting in the fight that will take the $BTC price clear of its current dangerous predicament.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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