Bitcoin Breaks Ascending Price Channel And Attempts To Defend Short-Term .618 Fib Support

coincodex.com 02 July 2021 10:27, UTC

Key highlights:

  • Bitcoin is down a small 1.5% today as the cryptocurrency continues to head lower from the $36K resistance seen earlier in the week.
  • It broke the previous short-term ascending price channel and is attempting to defend the support at $32,650 (.618 Fib Retracement).
  • If support at $32,650 breaks, all hopes rest in the range between $30K and $31.5K.

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Bitcoin price $32,941
Key Bitcoin resistance levels $32,650, $32,000, $31,500, $31,155, $31,000
Key Bitcoin support levels $33,000, $34,180, $34,500, $35,000, $36,000

*Price at the time of publication

The price of Bitcoin dropped another 1.5% today as it continues to dip from the intra-week high at $36,500. Bitcoin had rebounded from $30,500 over the weekend and produced a double bottom formation on the daily chart. Since then, it went on to form a short-term ascending price channel which allowed the coin to reach as high as $35,500 (bearish .618 Fib Retracement) this week.

Unfortunately, it has been unable to continue beyond this resistance and has since rolled over to break toward the downside of the price channel. The bulls are now trying to defend the support at around $32,650, which is provided by a .618 Fib Retracement level.

The wait continues for the next difficulty adjustment, expected in the next 24 hours. For a quick recap, China recently banned all cryptocurrency mining within the nation, forcing the slew of miners located there to shut down their operations and relocate abroad. As a result, the mining hash rate has dropped significantly, and this is expected to cause a huge mining difficulty adjustment lower.

Bitcoin has a mechanism in place which makes it harder to mine new blocks as the hash rate increases. This is to keep the block production in line with the 10-minute per block target. On the other side, if the mining hash rate decreases, then the difficulty would adjust downward to make it easier to mine.

The difficulty adjustment is expected at some point today and is expected to drop the difficulty by around 25%; 

looks like still tracking -25% #bitcoin difficulty adjust for friday. https://t.co/TuqYAFU1wU bitcoin unaffected, tick-tock next block. mining profitability ? pic.twitter.com/yONPd88xJq

— Adam Back (@adam3us) June 29, 2021

Since May, Bitcoin has been in a solid downtrend and has produced the third red monthly closing candle in a row. The recent price drop has caused BTC to trade majorly below PlanB’s stock-to-flow model, which predicted BTC above $100K by the end of 2021;

June closing price $35,037 .. as far below S2F model as in Jan 2019. Next 6 months will be make or break for S2F (again). pic.twitter.com/W3TM5sOAwY

— PlanB (@100trillionUSD) July 1, 2021

Bitcoin remains pretty undecided in the short term as the 5-week consolidation phase continues to develop. Legendary analyst Peter Brandt recently tweeted that $29,000 is critical for the bulls to defend moving forward. Failing this, it is likely that BTC would drop further toward $20,000;

The 5-week rectangle continues to form. The daily chart is decidedly negative. The burden of proof is on the bulls unless they can keep $BTC above $29,000. pic.twitter.com/xFVS7S0V7i

— Peter Brandt (@PeterLBrandt) July 1, 2021

In other news, it seems that the private investment firm owned by George Soros is starting to trade Bitcoin. The rumor appeared from a financial news website called TheStreet, in which they stated that Dawn Fitzpatrick, the CIO of Soros Fund Management, has been exploring cryptocurrency for “some time.”

The recent price drop has caused the market cap of BTC to fall back to $625 billion.

Let us take a quick look at the markets and see where we might be heading.

Bitcoin price analysis

Daily chart

What has been going on?

Firstly, looking at the daily chart above, we can clearly see the double bottom chart pattern occurring over the weekend at $31,500. From there, BTC started to rally higher and even pushed above a long-term falling trend line during the week. 

Unfortunately, it was unable to overcome resistance at $36,000 and has since dropped slightly.

4-hour chart

The 4-hour chart currently provides a better outlook of what is going on within the market. It shows that Bitcoin was trading inside an ascending price channel since the double bottom over the weekend. It traded higher inside this price channel until Tuesday, when it ran into resistance at a bearish .618 Fibonacci Retracement level at $35,615. 

BTC was unable to overcome this resistance, and it eventually rolled over from there and started to head lower. Finally, on Wednesday, it broke toward the downside of this price channel and hit the support at $31,780 (.382 Fib Retracement).

Bitcoin could not hold above this support level and has continued lower today. Therefore, we can see that the support at $32,650 is the next critical level to defend, provided by a .618 Fib Retracement. 

Bitcoin price short-term prediction: Neutral

Bitcoin still remains neutral in the short term and would have to break above resistance at $42,000 to start to turn bullish again. On the other side, a daily closing candle beneath $30,000 would be required to turn the market bearish.

If BTC heads lower, the first level of resistance is the aforementioned $32,650 level. THis is followed by $32,00, $31,500, and $31,115 (long-term .886 Fib Retracement).

Additional support is then expected at $31,000, $30,600, and $30,000.

Where Is The Resistance Toward The Upside?

On the other side, the first resistance lies at $34,000. This is followed by $35,000 (bearish .5 Fib Retracemetn), $36,000, and $36,500 (bearish .618 Fib Retracement).

Beyond the intra-week high, resistance lies at $37,000, $37,425 (1.414 Fib Extension), $38,000, and $38,620 (bearish .786 Fib Retracement). 

Looking further ahead, resistance is located at $39,000, $40,000, and $40,560 (long-term bearish .382 FIb Retracement).

Keep up-to-date with the latest Bitcoin Price Predictions here.

Previous BTC analysis

At CoinCodex, we regularly publish price analysis articles focused on the top cryptocurrencies. Here’s 3 of our most recent articles about the price of Bitcoin:

  • BTC Price Analysis – Bitcoin Trades Inside Ascending Price Channel as Bulls Attempt to Keep Momentum (Neutral)
  • Bitcoin Forms Double Bottom Pattern and Rebounds to $35K – Can It Break Above this Week? (Neutral)
  • BTC Starts Short-Term Rebound But Finds Resistance At $35K – Can It Break Above It This Weekend? (Neutral)

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