Bitcoin's price entered a correction period in the past few days and is now down about 5% this week. In this analysis, we look at the main levels to consider in the future.
Technical analysis
The 200-day moving average has historically been reliable support for bull markets and important resistance for bear markets. As the chart shows, bitcoin prices have reacted to the bearish flag-type uptrend line and 200-day moving average, settling above the $46,000 level for a few days before finally being rejected and plunging to lower price levels.
The chart charts a unique triangle price behavior pattern and BTC has now hit the uptrend line of the triangle. Either it will be supported by the trend line, forming a pullback to confirm another bullish leg, or prices will break below the trend line in an attempt to test lower support. On the daily chart, bitcoin has found another significant support in the form of the 100-day moving average, which is currently trading at $416,000.
Short term - 4 hours
Bitcoin was rejected by the channel's uptrend line within 4 hours, breaking below the $45,000 mark. The failure to break the bearish continuation flag pattern could be interpreted as a major bearish signal, indicating another collapse, possibly below $40,000.
On the other hand, bitcoin's RSI has a multi-day resistance trendline that it must break if it is to surge to higher price levels. In the short term, the $42,000 area will be the next support level for bitcoin.
Capitalization model of Bitcoin
Bitcoin has reached critical levels in the past few days, and it is wise to take a macro view of the market. The chart consists of bitcoin's market cap (black) and its 200-day moving average (orange), realized cap (green) and Delta cap (blue).
Historically, the 200 DMA has been a reliable support for bull markets and a strong headwind for bear markets. In general, a region above the 200-day moving average is considered a bull market, while a region below it is considered a bear market. Realized Cap has also been a reliable support for the first stages of previous bear markets. However, when it finally capitulates, it tends to break down, and when the market moves back above it, a bull market (or mini-bull market) begins. Finally, Delta Cap marked the absolute bottom of the last two bear markets very precisely.
The market is now below its 200-day moving average and is retesting again. If this moving average breaks upwards, the bull scenario will re-emerge and will most likely make an all-time high. However, if prices fail to break the 200-day moving average, further declines are expected similar to previous bear markets. This area (17K and 24K) may mark the absolute bottom of a potential bear market