Bitcoin Bears Salivate As The Crypto Plummets — But Here's Why A Bounce May Be On The Way

Bitcoin BTC/USD was plummeting more than 7% lower on Friday afternoon following in tandem with the SPDR S&P 500 ETF Trust SPY, which was trading about 1.7% lower.

The decline accelerated at 2:45 p.m. EST, when the SPY fell below the 200-day simple moving average (SMA). The 200-day is an important bellwether indicator that marks the turning point between what is considered a bull versus a bear market.

Bitcoin lost the 200-day SMA on Dec. 28 and has fallen an additional 20% from that date. In total, from its Nov. 10 all-time high of $69,000, Bitcoin has plummeted about 45%.

The future currently looks grim for the apex cryptocurrency, which has been sliding through support zones with ease. The crypto has settled into a pattern on the daily chart and if it holds, a temporary bounce may in the cards.

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The Bitcoin Chart: Bitcoin is trading in a falling wedge pattern on the daily chart and on Friday afternoon the bottom descending trendline of the pattern was holding as support. The pattern is considered bearish over the long term but aggressive bulls may choose to enter a position when the crypto retraces to the bottom of the pattern for an expected, but not guaranteed, bounce back up to the upper trendline.

• The crypto is trading in a fairly consistent downtrend on the daily chart and will soon need to print a higher low.
• Friday’s volume confirms the bears are in control and the bulls are fearful because Bitcoin’s price was falling on much higher than above-average volume.
• By mid-afternoon Bitcoin’s volume measured in at about 35,842 compared to the 10-day average of 14,317.
• Bitcoin’s relative strength index (RSI) is measuring in at about 24%. When a stock or crypto’s RSI falls below the 30% level it becomes oversold, which can be a buy signal for technical traders.
• Bitcoin has resistance above at $39,600 and $42,233 and support below at $35,593 and $32,000.

Image by Eglantine Shala-Udry from Pixabay