Bitcoin has returned to the $19,300 horizontal support area; it has broken out of an ascending parallel channel, and it is on the final wave of a five-wave downward move.
Bitcoin (BTC) has closed two consecutive bearish weekly candles and has almost dropped to a new yearly low below $20,000.
Bitcoin has been trending down since reaching an all-time high price of $69,000 in November 2021. This has led to a low of $17,622 in June 2022. The price then bounced back (green icon), validating the horizontal area. $19,300 as support.
However, the rebound was short-lived and BTC only managed to reach a local high of $25,211. Currently, Bitcoin has created two consecutive bearish weekly candles and is trading back at the $19,300 horizontal support area.
BTC Experiencing a Downside Breakout
The daily chart shows that BTC broke down from an ascending parallel channel that had been in place since June 18. Such channels generally contain corrective structures, meaning a breakout of them is the most likely scenario. So, the current drop confirms that the move is corrective and new lows will follow.
The daily RSI continues to fall and is considerably below 50, but has yet to reach its oversold territory.
Wave Count Analysis
The most likely long-term wave count now appears to be fully bearish. BTC began a five-wave (white) downward move after reaching its all-time high and is currently in the fifth and final wave.
Using a wave four pullback outside, the two most likely targets for the bottom are $15,400 and $12,700. These targets are the outer Fibonacci retracement levels of 1.27 and 1.61, respectively.
The short-term count suggests that Bitcoin is in sub-wave three of the fifth wave. This means that there could still be another sizeable move down after this.
A Short Review of Recent Events
At the time of writing this note, the cryptocurrency market is correcting this Monday’s session. Bitcoin lost more than 0.9% to 13,833 points, while Ethereum fell more than three percentage points to $1,446.50.
Cryptocurrencies have fallen sharply so far this year as Federal Reserve rate hikes and soaring inflation cause investors to dump riskier assets.
The fall of Bitcoin above $19,000 is a situation that has been repeated several times so far in 2022. The first time in the year that the cryptocurrency lost the support of $20,000 was on June 18, when the trend downwards took it to fall above $17,000 that same day, the worst record since November 2020.
Sites specialized in cryptocurrencies, such as Coindesk, indicate that the recent announcement of a possible new increase in interest rates, by the United States Federal Reserve (Fed), had an impact on the price drop in the cryptoactive market.
“The largest cryptocurrency by market fell as much as 3.4% to $19,947.32 on Saturday at 2:40 p.m. Singapore time, dipping below $20,000 for the first time since July 14 and extending its drop this year to 57%,” confirmed Bloomberg Line through a publication.
By Audy Castaneda
