After a $1,400 drop in a week, will Bitcoin's bull run return?

Global stock markets experienced their worst week in 12 years this past week, and as this stock market crash occurred, the cryptocurrency market was also hit hard.

Bitcoin and the entire cryptocurrency market have seen a sharp sell-off over the past week, which is a reasonable outcome considering people are selling assets due to concerns about potential economic instability. Other safe-haven assets such as gold and silver also saw a massive sell-off on Friday.

So, with the Bitcoin halving fast approaching, will the cryptocurrency market be able to find support in the coming weeks, or will it continue its current downward trend?

Bitcoin sell-off after breaking below key $9,400 support

Previously, the price of Bitcoin encountered strong resistance at the $10,400 level, and then urgently needed to test the key support level of $9,400. However, on February 25, Bitcoin fell below $9,400, which immediately triggered a sharp sell-off in the entire cryptocurrency market.

The sell-off also led to Bitcoin finding support in the $8,200 to $8,400 range. However, in the short term, many believe that the uptrend may have been broken as the price of Bitcoin has made lower lows on the daily chart, a key indicator of downward momentum.

So, does this mean that the entire cryptocurrency market will change course and enter a downward trend? However, it should be noted that the current price of Bitcoin is still 27% higher than at the beginning of the year, which still makes Bitcoin one of the best performing assets this year.

The weekly chart needs to focus on the 21-week moving average

The weekly chart is currently stuck at a very critical position, the 21-week moving average. During the last bull market cycle, this level was held in December 2017 and served as support towards the top of the bull market, making the 21-week moving average a level that bulls need to hold on to at present.

If the price of Bitcoin can get support at this level, it may mean that the upward momentum will continue for some time to come. Currently, the 21-week moving average is roughly around $8,400.

Of course, in order to maintain its upward momentum, Bitcoin must also break through the previous high of $10,400 later. However, at present, the most important thing is that Bitcoin first needs to find support at $8,400.

If the Bitcoin price fails to find support at $8,400, the next target will be $7,500 to $7,700.

Total market capitalization finds support

Judging from the K-line chart of total market value, the total market value of cryptocurrencies cannot break through US$300 billion and cannot find support at US$250 billion, so the entire market may continue its downward trend.

However, the total market value is also approaching a key position, the 21-week moving average. Throughout the entire cycle of the last bull market, the 21-week moving average of the total market value has never been broken.

Additionally, there is another key level to watch in addition to the 21-week moving average. During 2018 and 2019, the total market capitalization found support at the $225 billion level several times.

Are altcoins close to bottoming out?

The total altcoin market capitalization shows a similar scenario to the overall market, having encountered strong resistance at the $115 billion level and is currently finding support.

An important level to watch first is around $73 billion to $75 billion. If the total altcoin market capitalization can find support around $73 billion, it is possible to resume the uptrend.

Bullish outlook for Bitcoin

If Bitcoin wants to resume its uptrend, it first needs to find support at $8,250 to $8,400 and then rebound towards $9,200 to $9,400.

Since the previous key support level of $9,400 has turned into a resistance level, if Bitcoin wants to continue its upward momentum, it needs to further break through $9,400. If successful, it will provide the possibility of further recovery to the previous high of $10,400 two weeks ago.

In short, at present we need to pay close attention to whether Bitcoin can get support at the 21-week moving average.

Bitcoin’s bearish outlook

There are several bearish scenarios. First, if the price of Bitcoin rises without a significant increase in trading volume, and falls back to $8,950 or even $9,175, it means that the entire trend has turned into a downward momentum, and the price of Bitcoin should fall further.

At that time, the price of Bitcoin will test the support of $8,200 to $8,400 again. Once it falls below, Bitcoin will further drop to $7,500 to $7,700, which is also the last important support level.

Source: Maitian Finance