The latest failed attempt to reclaim $40,000 puts the Bitcoin price in danger of a deeper decline. Technicals indicate a return to $$27,500 may come next.
In what could be a re-run of last week, Bitcoin has started the weekend under heavy selling pressure. In fact, as is common when BTCUSD declines, the whole crypto market is a sea of red.
BTCUSD is trading at $35,100, having lost over -$6,000 from Wednesday’s high.
This comes on the back of its inability to stay above the psychological $40,000. However, in my mind, the 200-Day Moving Average at $40,847 is the most important line for Bitcoin.
The Bitcoin price has provided plenty of opportunities for traders recently. Any move towards the 200 DMA has been a great selling opportunity. I have stressed this consistently to my Twitter followers.
Over the last week, the Bitcoin price has made 4 attempts to break higher. Each of these rallies has reversed between $39,700 and $40,800. The most recent of which has seen the price drop -15%.
So it seems fairly clear that there is selling capping the price around $40k. But how far could the price fall?.
Bitcoin Price Outlook
The daily chart shows us just how mixed Bitcoins’ fortunes have been in 2021.
In the second half of 2020, BTCUSD had been on a blistering run higher. Trading around $9,000 in June, it added +200% to finish the year at $27,700.
This year started in the same vein. By May, the Bitcoin price was $64,900, and higher by another +135%.
Since peaking in April, a series of sharp declines have followed. In the second half of May the price plummeted below $30,000 for the first time since January.
The recovery was swift and the bounce violent. Since the 19th of May crash, BTC has been extremely volatile in a wide trading range between $31,000 and $41,000.
In my opinion, every time the market is unable to break the range on the upside, it increases the chances of the reverse happening. I predict that the Bitcoin price is now likely to head lower and potentially break below the recent range.
The ultimate downside is the 2020 close of $27,700. This would be a 100% retracement of this year’s bull run.
It goes without saying that if the market eventually manages to claw its way above the 200 DMA at $40,847, I will be proved wrong.
This event would suggest that the price has regained bullish momentum and cancel my bearish view.
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BTCUSD Daily Chart
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