If the price of Bitcoin falls to $7,500, will investors still remain optimistic?

Bitcoin (BTC), the largest cryptocurrency by market cap, is seeing a narrowing price range, still hovering around $9,000. At the same time, we are also seeing a decline in Bitcoin trading volumes and an increasingly volatile stock market, which could also affect Bitcoin.

However, is a pullback to $7,700 a bad reason for Bitcoin to move higher, or is staying above $9,000 crucial for any bullish momentum?

Bitcoin $9,000 as key support

Traders and investors should think back to the summer of 2019. Bitcoin rallied sharply, approaching $14,000, before eventually falling back to $9,000. In the months that followed, the price remained stable at the support level for a long time.

The $9,000-9,300 level provides a ton of support and many significant price tests have occurred there.

Currently, the price of Bitcoin is also hovering above this support level. In addition, there is still support in the $8,250-8,500 area.

On the other hand, the resistance zone remains clear: $10,100-10,500. Since the resistance zone has been tested several times in the previous year, another test of this resistance zone should end with a breakout to the upside.

A breakout above the resistance level could trigger price acceleration and potentially a rally of $1,000 or more.

The 4-hour chart shows a tight range between $9,200 and $9,600

The 4-hour chart shows a clear structure with the $9,600 area acting as the current resistance zone, while the $9,175-9,225 area is a key support level.

Additionally, the price of Bitcoin lost support at $9,200 earlier this week, with the chart showing a move to $8,900. However, this drop was short-lived, with the price of Bitcoin quickly rebounding to $9,600.

As mentioned earlier in this article, the more often a resistance level is tested, the weaker it becomes as sellers become exhausted. If the price of Bitcoin stays above $9,200, the $9,600 resistance will be tested again and there is a good chance that it will end with a breakout to the upside.

Total market value is still in a bull market

Total market capitalization has still increased significantly in recent months, while also showing an upward trend since the March crash.

With the flash crash to $3,600 sending liquidity crashing to its lows, it would not be surprising to see a sustained rally that pulls liquidity above recent highs, which were $306 billion (the equivalent of Bitcoin above $10,500).

Generally speaking, the green zone and the 100-day and 200-day moving averages (MAs) are crucial. Since the total market capitalization remains above these MAs, it is concluded that the market is still in a bull market.

A closer look can provide some insight into the short-term outlook.

As shown in the chart, support is between $240 billion and $245 billion. As long as this level holds support, further gains are warranted.

However, the chart also shows that the total market capitalization dropped below the $265 billion level marked as resistance.

In case of a decline, the $240-245 billion support level must hold. Otherwise, $215 billion will be the next market to watch. On the upside, a breakout of $265 billion will warrant further continuation. If the $265 billion level flips support, $306 billion will come into play.

Bullish outlook for Bitcoin

The bullish outlook is to hold out against the $9,200 support level. As long as this level remains supportive, this scenario can be used as a reference.

If $9,200 holds, then here comes a retest of $9,600. As mentioned before, the more times a resistance or support is tested, the weaker it becomes.

In this case, the $9,600 resistance level has been tested several times, which usually results in a breakout to the upside. The moment $9,600 is broken, the market should expect a rally towards $10,000.

If this establishes a new range, the price could stabilize for a while. However, if the bullish outlook materializes, further upside momentum is possible. If the price starts to climb towards $10,100-10,500, the likelihood of a breakout from the resistance level becomes increasingly likely.

The $10,500 resistance has been tested several times, which means the price could run to this level again soon. If this happens, it would not be surprising to see the price per Bitcoin between $11,600 and $12,000 soon.

Bitcoin’s bearish outlook

The bearish scenario is also consistent with the $9,200 support level. Since the $9,600 resistance has been tested for some time, the same conclusion can be drawn with the $9,200 support level.

If it loses it, there is momentum for a significant downside move and a sharp drop towards the $8,250-8,500 area is unlikely.

If the price rebounds from $8,500 to $9,100 and immediately rejects, it could trigger a continuation of the decline.

However, even if the price of Bitcoin returns to the $7,500 area (an important support area that remains untested), it remains bullish on higher time frames. Market corrections are healthy and should be considered potential dip buying opportunities. (Baijiahao)