Bitcoin, the leading cryptocurrency by market capitalization, is facing a downward pressure as it struggles to maintain its recent uptrend. The price of BTC has dropped below a key support level and is threatening to break an uptrend line that has been holding since last week. This could signal a potential reversal and further losses for the digital asset.
Bitcoin Generates “Golden Cross” But Fails to Sustain Momentum
Bitcoin’s price had been showing signs of strength in the past few days, as it formed a bullish pattern known as a “golden cross” on its four-hour chart. A golden cross occurs when the 50-period simple moving average (SMA) crosses above the 200-period SMA, indicating a shift in the long-term trend from bearish to bullish.
However, the golden cross failed to spark a significant rally for Bitcoin, as the price faced resistance at around $28,000 and $28,800. Moreover, the trading volume remained low, suggesting a lack of conviction and enthusiasm among buyers. As a result, Bitcoin’s price started to decline and broke below a crucial support level at $26,650.
Bitcoin Breaks Below Uptrend Line and 50 SMA
The downward move of Bitcoin’s price also caused it to break below an uptrend line that had been supporting its rise since September 18. The uptrend line was drawn by connecting the higher lows that Bitcoin had been making on its four-hour chart. The break below the uptrend line indicates a loss of momentum and a possible change in the direction of the trend.
Additionally, Bitcoin’s price also slipped below the 50 SMA, which had acted as a dynamic support during the uptrend. The 50 SMA is now acting as a resistance, preventing Bitcoin from recovering its losses. The relative strength index (RSI) is also below 50, confirming the bearish bias of the market.
Bitcoin Faces Further Downside Risks
If Bitcoin’s price fails to reclaim the uptrend line and the 50 SMA, it could face further downside risks in the near term. The next major support level for Bitcoin is at $25,000, which coincides with the psychological round number and the June low. A break below this level could trigger a sharp sell-off and expose Bitcoin to lower levels such as $23,000 and $21,000.
On the other hand, if Bitcoin’s price manages to bounce back above the uptrend line and the 50 SMA, it could regain some bullish momentum and challenge the resistance levels at $28,000 and $28,800. A break above these levels could signal a continuation of the uptrend and open the door for higher targets such as $30,000 and $32,000.