Bearish Bitcoin fractal with 78% success rate flashes as BTC drops below $43.5K

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Last week in Bitcoin (BTC), which saw BTC price fall from $ 47,358 to $ 43,178, raised fears of an extended sell-off.

Independent market analyst Nunya Bizniz highlighted bearish fractal on Bitcoin’s weekly charts on its 21-week exponential moving average (EMA).

In detail the cryptocurrency has closed below the aforementioned support zone 18 times so far, but has retained its previous bullish bias only four times – as shown by the dotted vertical lines in the diagram below.

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Daily price chart of BTC / USD with its 21-week EMA. Source: Nunya Bizniz, TradingView.com

In the remaining cases, a close below the 21-week EMA led to Bitcoin prices being extremely lower, except for a false bearish boom in August 2015, which soon resulted in a “huge bull run,” as the analyst noted.

Similarly, the recent break of Bitcoin under the wave in May 2021 also dropped prices below $ 30,000 for the first time since January 2021. However, the crossover did not result in an adult bearish collapse; retailers bought the dip close to $ 30,000 and led the prices above $ 50,000.

But overall, the phenomenon of Bitcoin prices breaking below a 21-week EMA has caused a prolonged sell-off almost 78% of all time.

Bitcoin is slipping below a 21-week EMA, again

Bitcoin closed the week ending Sept. 26 at $ 43,178, drawing attention to its 19th historic decline below the 21-week EMA – which is about $ 43,502 at the end of the week.

While the fractals predicted a disadvantageous outcome, a close look at the relationship between the 21-week EMA and 50-week simple moving average (SMA) – as shown in the chart below – noted that a possible bearish outlook would need further validation.

This is mainly due to the immediate reaction of traders to the two moving averages, especially when the 20-week EMA (the green wave) closes below the 50-week SMA (the blue wave). The so-called Death Cross indicator previously coincided with further declines in the Bitcoin market.

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Bitcoin price weekly chart with dead cross 20-50-MA. Source: TradingView.com

For example, the BTC / USD rate slipped below its 21-week EMA (~ $ 8,041) in the week ending January 29, 2018, but maintained its upper bias until the green wave closed below the blue. Later, the pair founded close to its 200-week SMA (close to $ 3,187).

Similarly, the death toll 20-50 MA in March 2020 came just a week before the infamous sale of Covid-19, led by the global market crash led by Covid-19. Again, Bitcoin ended up closing close to its 200-week SMA (~ $ 5,512), only to bounce back to new record highs in the sessions later.

Related: JPMorgan CEO says Bitcoin price could rise 10x but still won’t buy it

Therefore, it seems that the potential death of Bitcoin between its 20-week EMA and 50-week SMA could trigger the next sales crisis with the ultimate downside target sitting close to the 200-week SMA (around $ 16,000).

At the same time, Fibonacci levels near $ 34,712 and $ 27,580 could dampen Bitcoin prices to the 200-week SMA.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you need to do your own research when deciding.