Bitcoin (BTC) is at a technical crossroads after losing significant territory, leading some market watchers to say that this week’s price will determine whether the crypto market can retrace its rise or extend recent losses.
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Retesting Bitcoin 21W EMA To Be Sure
After closing the week at around $77,450, Bitcoin started the new week falling to a new low of $76,050. The cryptocurrency has been trading between $76,300 and $82,500 throughout its May rally, failing to break the necessary resistance despite several attempts.
In Monday’s analysis, market watcher Rekt Capital he realized that drop on Sunday saw BTC close below the key 21-Week Exponential Moving Average (EMA), around the $78,000 area, after successfully maintaining this level as support for several consecutive weeks.
The analyst explained that the activity “shows how the buying power has become useless at the support of the 21-Week EMA, creating a weak rally even after several retests.” It also means that the value is set at a bearish a retest of this level, and any short term support rally that would turn the EMA into resistance.
He added that a reversal should occur as Bitcoin has now formed a new CME Gap every week around this area. Therefore, a potential rally could turn the 21-Week EMA into a new resistance and support the newly formed CME Gap.
“It will turn the old CME Gap area into a new resistance; after all, the previous CME Gap has become a technical losing range given the Weekly Close below the old CME Gap,” the market watcher added.
Rekt Capital confirmed that this week is necessary to restore the power thoughtsand Bitcoin needs to close above the EMA and inside the CME Gaps to regain its strength.
BTC Faces ‘Cascading Dumping’
Currently, Easy On Chain expert he confirmed that the Bitcoin sell-off may not be over yet, as it was not driven by a short-term correction, but “a well-managed crisis caused by the economic slowdown and widespread fear in the market.”
Based on CryptoQuant’s data, they analyzed the “clear-cut” pattern in which the adoption of Bitcoin by long-term holders causes panic selling among short-term investors.
The data shows that the long term effective those who bought in the past 6 to 12 months have a net worth of about $110,851, meaning many have stepped into unrealized losses after the recent downturn.
From Thursday, the output of the chain shows a large exchange from these holders, with the ratio of Spent Output Age Bands (SOAB) for funds of 6-12 months rising to 10.54%, far from the level of 1%. Historically, this has led to a large, over-inflated stock market that spreads to short-term investors.
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In addition, long-term products, which are about 80%. exchange inputs, are currently trading at a loss below the critical break-even point (1.0), indicating that most short-term investments are not taking profits, but fear-driven losses.
“Therefore, the recent decline is a market problem resulting from the removal of derivatives, high long-term sentiment, and excessive fear from short-term participants,” he said, confirming that “until the poison settles and sentiment stabilizes, a V-shaped recovery remains doubtful,” and investors should avoid withdrawals.
Image from Unsplash.com, Chart from TradingView.com
