Bitcoin Price Drops to Key Level as 100% Rally Since Crash Looks Shaky

All markets have been showing a strong surge in the past weeks, including Bitcoin (BTC) and cryptocurrencies. The price of Bitcoin has seen a 100% surge in a matter of three weeks since the crash.

However, is such a rally sustainable in the current economic environment? And what is needed for a further continuation upwards in the cryptocurrency markets?

Crypto market daily performance. Source: Coin360

The price of Bitcoin loses 3-week old trendline

The price of Bitcoin has been seeing a significant rally since the massive crash on March 12, as the price rallied almost 100%. However, the rally came to an end as the uptrend was lost two days ago.

BTC USD 12-hour chart. Source: TradingView

The 12-hour chart is showing a clear breakdown of the upwards trendline, indicating weakness and a probable reversal around the corner.

The price of Bitcoin couldn’t reach the next resistance, as the price rejected at $7,400, while many traders were anticipating a rally towards the $7,600-7,800 level.

Further, the 12-hour chart is showing that the price of Bitcoin is holding on to the final level of support before a further heavy dropdown is ready to occur.

BTC USD 12-hour chart. Source: TradingView

The last support area for bulls is in the $6,750-6,800 area. The first sign of weakness was losing the yearly and monthly level at $7,200. However, losing the $6,750-6,800 would trigger a further heavy dropdown and would trigger a higher volume drop.

The recent drop down didn’t cause a high volume profile while losing the next support zone at $6,750-6,800 will likely provide a giant sell-off towards the support zone at $5,800 and confirmation of a further downwards trend.

The reason for that is that the price of Bitcoin would be making lower highs and lower lows initiating the continuation of a downtrend.

Weekly time frame needs to close above 100-Week MA

BTC USD 1-week chart. Source: TradingView

The weekly chart is the most crucial chart at this point. Closing the weekly candle above the red zone and preferably above $6,900 would give bullish signals of continuation. The resistance level at $6,900 will be cleared, and what’s more, the price of Bitcoin would reclaim the 100-week MA (Moving Average), which can be stated as a bullish signal for the market.

However, the wicky structure of the recent rally upwards confluent with the decreasing volume implies a downward test is likely to occur.

In this case, if the weekly candle doesn’t close above the 100-Week MA, a further drop is expected for the markets, which implies the support levels at $5,000-5,200 and $3,800-4,000 as the major support levels to watch.

Total market capitalization crypto also showing weakness

Total market capitalization cryptocurrency 12-hour chart. Source: TradingView

The total market capitalization of cryptocurrencies is also showing weakness as the market capitalization rejected at the $205-210 billion resistance zone.

Generally, the total market capitalization is showing a clearer picture than the Bitcoin chart alone. The market capitalization rallied towards $210-220 billion, which was the area before the massive dump occurred. This area is similar to the level of $7,600-7,800 on the Bitcoin chart.

The $210-220 billion then saw a swift rejection, after which temporary support at $185 billion was found.

However, losing the $185 billion will imply further downwards momentum, and the next levels are then the $105-115 billion, $130 billion and $153 billion. Each one of these levels would indicate that a significant drop is to be expected.

Altcoin market capitalization crypto 12-hour chart. Source: TradingView

The altcoin market capitalization shows a worse picture than the total market capitalization, as it’s currently hanging between two levels. Support is found 8% lower at $62 billion, while the total market capitalization of altcoins is massively rejected at the upper resistance level.

This implies that altcoins are going to see a more severe move than Bitcoin. In other words, the moment BTC loses the $6,750-6,800 area for support, it’s to be expected that altcoins are going to see a more substantial drop than Bitcoin.

The bullish scenario for Bitcoin

BTC USD 3-hour chart. Source: TradingView

The bullish scenario is pretty straightforward but less likely at this point. The price of Bitcoin just lost an upwards trend, which implies further downwards pressure to occur.

However, there’s a possibility that the dropdown is a fake-out. For that to be the case, the price of Bitcoin needs to hold the $6,750-6,800 area for support, in the first place.

After that, the main goal to go for is reclaiming the yearly level at $7,200 for support. Once that happens, a further upwards push is to be expected. Targets to be defined are $7,800-7,800 as the next levels.

Such a move upwards should preferably occur over the weekend as then the weekly candle would close above the 100-Week MA.

The bearish scenario for Bitcoin

BTC USD 3-hour chart. Source: TradingView

As stated in the bullish scenario, it’s not expected that we’re going to break back further upwards. Therefore, the most likely scenario would be a bearish scenario where the price continues to drop.

If the weekly candle doesn’t manage to close above the 100-Week MA, a swift drop is expected, confluent with losing the $6,750-6,850 range.

However, over the weekend, a potential rally towards $7,050-7,150 could occur to confirm the previous support becoming resistance.

Losing the $6,750-6,850 area would imply that the market is showing weakness, and the next massive support area to watch is the $5,600-5,800 area. In between potential temporary support can be found at $6,300.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.