Bitcoin price must hold the low $9Ks to continue its upward grind and finally conquer the psychological $10,000 level.
The price of Bitcoin (BTC) has been trying to break above the psychological barrier of $10,000. However, during the week, it failed to go through this resistance. This “fakeout” caused a significant portion of the market to shift from a bullish bias to a bearish bias.
Is such a bias shift warranted in the current structure of the market? Altcoins have been continuing their upwards momentum since the drop with some demonstrating significant rallies.
Crypto market daily performance. Source: Coin360
Bitcoin shows a harsh rejection at $10,000
BTC/USD 1-day chart. Source: TradingView
The daily chart of Bitcoin is showing a harsh rejection of the $10,000 barrier. This heavy selloff is causing a momentum and sentiment shift in the market, which seems unnecessary.
The price of Bitcoin rallied above the previous high, which was $10,100. This is common, as the price takes the liquidity above this resistance to fuel a move in the opposite direction. In this case, “breakout traders” get trapped by buying the breakout.
However, what happened by the drop-down?
BTC/USD 2-hour chart. Source: TradingView
The 2-hour chart is showing a clear picture of these moves. Price rallied above the previous resistance while failing to establish support above the $10,100 level.
By failing to do so, the price dropped back in the range, causing a massive volatile move of $800 to the downside. The drop was very rapid and quick as the price dropped in a matter of minutes.
The primary reason behind the fast pace of this drop is the chain reaction of stop/loss levels getting triggered. The majority of the traders moved their stop/loss beneath the $10,100 level, through which a vast majority of traders got stopped out.
However, is there any support level between $9,400 and $10,100? Basically not, so the price comes back to the previous support level to find buyers.
That BitMEX and other exchanges have a wick towards $8,600 is provided by leveraged trading and should be a reason to be massively cautious trading leverage or using these platforms.
Is the upwards structure still intact?
The structure, which is upwards since March 12, is still valid.
BTC/USD 1-day chart. Source: TradingView
The chart shows a clear upwards trend where constant higher lows have been made. These higher lows are a crucial factor for upward momentum, which is still happening in this case.
But now, it’s becoming crucial for the market not to make a lower low, i.e. below the $8,600 level.
However, personally, the green zone between $9,050-9,300 is an essential area to hold. If that level is lost, further downwards momentum towards $8,250-8,500 and possibly $7,500 is likely.
Total market capitalization still in an uptrend above 200-Day MA
Total market capitalization cryptocurrency 1-day chart. Source: TradingView
The total market capitalization of cryptocurrencies is still trending upwards. A similar fakeout to the upside is seen on the charts as with Bitcoin’s chart.
However, the total market capitalization is also acting above the 100-day and 200-day MA, which confirms a bullish trend.
Preferably, the green area between $247-251 billion needs to remain as support. As long as $247-251 billion sustains, further upwards momentum is warranted. This upwards momentum could lead to a test of the $310 billion resistance level.
A breakthrough above this high would mean a new higher high and another bullish argument for the start of a bull market.
Can the altcoin market cap go above $115 billion?
Total altcoin market capitalization cryptocurrency 1-day chart. Source: TradingView
The altcoin market capitalization is showing a more reliable construction than Bitcoin or the total market capitalization. Will that mean that altcoins are going to outperform Bitcoin in the coming period? Some large caps like Cardano (ADA) and Ether (ETH), for example, are already showing strength.
However, preferably support has to remain at $82-83 billion. If that sustains, further upwards momentum is confirmed on the altcoin market capitalization.
The next resistance level is $113-115 billion to be tested. Losing the $82-83 billion areas would mean a retest of the 200-day MA around $70 billion.
The bullish scenario for Bitcoin
BTC/USD 1-day bullish scenario chart. Source: TradingView
The bullish scenario is straightforward and has been stated earlier in this article. The green zone at $9,100-9,300 has to remain support to continue the momentum upwards.
A potential wick towards $8,750-8,800 is possible on the charts, but the price shouldn’t make a new lower low.
As the liquidity is already taken above the $10,000 level, a renewed test of this resistance zone should lead to a continuation upwards. Given that the charts are still providing a CME gap at $11,500, confluent with a horizontal resistance level, it’s likely to expect a rally towards $11,500 as the next resistance zone.
The bearish scenario for Bitcoin
BTC/USD 1-day bearish scenario chart. Source: TradingView
The bearish scenarios are depending heavily on whether the market holds support at the $9,100-9,300 level or not.
If the price of Bitcoin drops below the green zone, a bearish retest and confirmation of resistance will trigger continuation further downwards.
Likely targets in that regard would be the $8,250-8,500 levels and the $7,500-7,800 zones.
However, the price of Bitcoin is trending upward, so continuation to the upside is likely, particularly after the strong rally since March 12 to pare all losses.
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.