Bitcoin ($BTC) is continuing to struggle, languishing under $57,000 once again. It seems that even the institutions are starting to feel the pain as another 4.87K $BTC was sold out of the Spot Bitcoin ETFs on Tuesday.
Weaker hands being shaken out
Deep in the doldrums once again, the $BTC price is threatening yet more downside. A fifth straight day of Spot Bitcoin ETF outflows is certainly not helping matters. It looks like perhaps some of the institutions are getting cold feet, given the months of sideways and downwards price action for the alpha cryptocurrency.
However, most institutions would surely continue to hold, in view of the fact that their time horizons would be far longer than the average retail investor. Market analysts always talk about “shaking out the weaker hands”, and this could be a time when this exact process is happening.
Battle to hold $56,700
Source: TradingView
In the short term time frame, it can be seen that the $BTC price has dropped out of the channel, and has returned to retest the bottom trend line. This trend line also coincided with the important $58,000 horizontal level, which has now been turned into resistance.
The price is now battling to stay above the $56,700 support. While this is quite a decent level of support, if the price does fall through and confirm below, a free fall could follow down to the low $50,000s.
Inverse head and shoulders pattern continues to form
Source: TradingView
Moving out into the daily time frame, one can observe how the $BTC price is still traversing safely within the bull flag/widening wedge. Just how safe this will be, if the price gets down to $51,000, remains to be seen.
That said, an inverse head and shoulders pattern has started to form. This would allow the right shoulder (where the current price action is) to come down quite a bit further, without nullifying the pattern. This means that the $BTC price could come all the way down to that $51,000 support, before potentially reversing strongly.
Higher time frame – what’s the fuss about?
Source: TradingView
Zooming much further out into the weekly time frame, some might wonder what all the fuss is about. A bull flag that is continuing to form, and price action above most of the market structure from the last bull run – things actually look quite promising.
The more price structure that can be built around this area the better. This can serve as a platform for the continuance of this bull market, and also potentially as a base to come back to and retest in the coming bear market.
At the bottom of the chart the Relative Strength Index (RSI) shows a series of lower highs – signalling a downtrend. The orange line marks support and resistance for this structure. If all goes to plan, the indicator could come down to test this line, before bouncing and attempting to break the downward trend. If this trend is broken, and a higher high can be made, stand by for a strong $BTC upsurge. However, if the line breaks to the downside, expect a continuance of the downtrend.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
