Bitcoin Price Plunges Below Last July Low, May Test $25k Support

  • BTC formed a head and shoulder pattern
  • Earlier support of $30k broken today
  • Coin may soon test the $25k support
  • A reversal will take BTC to the next cycle of ATH above $70
  • This could happen in months or in years

The market still bleeds with most digital assets in red. According to charts from Tradingview, the digital asset has formed a head and shoulder pattern. It has also broken the support it formed last July on the left side of the support. The support at $29,786 was broken today, May 12, opening the digital currency to lower lows.

BTC price analysis

BTC is presently trading at $29,337 on Bitstamp. Data available on Tradingview shows that the coin is still on a downtrend and may test the lower support at $25,401, if the bearish trend persists.

History of Heads And Shoulders

In a historical sense, the $30k support is an important one that the Bitcoin market has supported since January 18, 2021. That the market failed to support it this time implies that it is heading towards the $19k support, which in a sense is a weaker support than $30k.

The first prominent head and shoulder pattern on the Bitcoin 5-year chart was formed in December 2017. Thus was when Bitcoin hit a high of $19,600. Another was formed on January 4, 2021, when the coin traded at $38,178.

In February 15, March 8 and March 21 of 2021, the digital currency also formed head and shoulder patterns that corresponded to $57,492, $59,016 and $59,979 respectively. A head and shoulder pattern with its head at $58,305 was formed on May 3, 2021. This pattern has occurred at least 4 times since then.

If History Repeats

Based on the historical patterns that Bitcoin has formed since December 2017, it is easy to conclude that the current market trend will bring the price of the cryptocurrency down to the $20k mark. However, a lot has changed since 2017 so we should be more optimistic with the prospect of an early reversal of the trend.

Bitcoin Price Analysis

The 20-day and 50-day moving average shows that the trend is definitely downtrend. But what can be learnt from the relative strength index indicator which has a value of 33 is that the bulls have been fighting back, even with the odds against a reversal. BTC is oversold, so we should expect a price stabilization above $25k. The reversal may take place above this support, but if it fails, a drop to $20k region is inevitable.

BTC price analysis

Putting it All in Perspective

What investors must not lose sight of is that all the drops in the value of BTC are corrections. Whether the chart is interpreted as a wave or head and shoulder pattern, BTC was meant to correct after every cycle. Even though no one knows where the bottom is $25k or $20k, it will cause a rebound that takes the asset to the next cycle of another all-time-high above $70k. This could happen in months or in years.

 

This is not financial advice.

Author: Jofor Humani

Jofor is a crypto journalist with passion for investigative review of projects with the aim to determine the authenticity of their claims.