Bitcoin (BTC) is currently experiencing a downtrend in response to recent regulatory actions by US authorities against major players in the cryptocurrency market. BTC has struggled to surpass its significant resistance wall at $28,700, leading some investors to suggest that a pullback would be healthy for the largest cryptocurrency in the market.
Bitcoin is trading at $26,800 and has remained relatively stable since Monday, following a dip below its annual high of $28,700 that was reached in March. Bitcoin has recently experienced a strong uptrend, with a gain of over 45% from its lower levels, but can BTC hold a 7% dip towards the %25,000 support?
Healthy Pullback For Bitcoin Or Another Chance For Bears To Take Over?
According to the trader and crypto analyst Rekt capital, Bitcoin needs to have a monthly candle close above $25,000 to confirm a macro downtrend break, and with BTC trading at $26,900 as of this writing and with three more days to hold above that key level, there are good chances for bulls to confirm the new trend.
Furthermore, a monthly candle close above $25,000 would indicate a significant shift in Bitcoin’s long-term trend, potentially leading to further gains, new yearly highs, and bullish market sentiment.
Despite the potential price drops, Bitcoin is poised for a breakout and a macro trend shift. As the monthly close approaches, Bitcoin’s market position looks favorable. Interestingly, even if Bitcoin drops by $1,900 (7% of its current price), it could still be well-positioned for a continuation of its bull run.
Will BTC’s Dominance In The Market Follow Its Price Action?
According to Rekt, Bitcoin’s dominance is in a Back Wedge structure that has existed since May 2021. The analysts suggest that Bitcoin’s dominance is also well positioned for a confirmed breakout from this structure, with a potential monthly close beyond the downtrend resistance dating back to May 2021.
Rekt Capital’s analysis suggests that Bitcoin dominance may dip into the Wedge top, as seen in the chart above, leading to a potential influx of money into altcoins.
Bitcoin is trading within a broader range of $26,700 to $28,600, and it’s challenging to predict its price action until a significant break occurs.
However, if Bitcoin experiences a drop below $26,000 and approaches $25,000, it will encounter strong support above the 55 exponential moving average (EMA). This support level could help Bitcoin recover and make another attempt to break above the resistance level.
BTC has the potential to recover the $30,000 level it lost during the June 2022 bear market. To achieve this, the cryptocurrency must maintain its nearest support level and trade above the 55 EMA to attempt to take by storm the $28,600 resistance.
Featured image from Unsplash, chart from TradingView.com