Bitcoin hit a 7-week low today – here’s what traders need to know

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Analysts are intervening after bitcoin fell to its lowest since October 6. (Photo Illustration by … [+] Chesnot / Getty Images)

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Bitcoin prices fell today, dropping to their lowest since early October and setting their latest multi-week low.

The world’s largest digital currency in market value fell to $ 53,359.80, according to data from CoinDesk.

At this point, it was trading at its lowest since October 6, additional figures from CoinDesk reveal.

After dropping to its lowest level in more than seven weeks, bitcoin prices rebounded, topping $ 57,000 later today.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Vendors test key support level

Recently, bitcoin prices have repeatedly hit $ 53,000, a level some analysts have identified as providing key support.

Although digital currency has made attempts at this level, they have all failed.

Several technical analysts have weighed in on the implications of bitcoin’s repeated failure to convincingly break through the nearly $ 53,000 support.

“As of Friday, Bitcoin began testing support at around $ 53,000,” said Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital.

“Every time he fell to that level he would bounce higher, signaling strong support there,” he added.

“Today’s drop to just over $ 53,000 has caused it to rebound” at a higher price, added DiPasquale.

“This indicates that we have a strong buying interest at this level. When repeated support occurs, it is evidence of demand at that level and a bullish signal that the asset will appreciate from there. ”

Dylan LeClair, head of market research for Bitcoin Magazine, also commented on the situation.

“$ 53,000 is a key level, which happens to be the average base cost of the chain of short-term holders in the market,” he noted, citing market data.

“Throughout Bitcoin’s history, the realized price (based on chain costs) of short-term holders has served as a key support for the bull market.”

Konstantin Anissimov, Executive Director of CEX.IO, also spoke at the key level. However, he offered a different point of view on the matter.

“We see three factors contributing to $ 53,000 as strong support,” he said.

“Bitcoin’s market cap is $ 1,000 billion at $ 52,950. This level has been a key support / resistance until 2021 and is now being tested again as support.”

The table below illustrates what Anissimov described.

This chart shows how the $ 1,000 billion market cap served as key support and resistance.

Graphic provided by Konstantin Anissimov of CEX.IO.

In addition, he referred to other developments that may be of interest to market observers.

“The recent selling pressure is largely driven by liquidations with minimal signs of selling / capitulation from long-term market participants,” Anissimov said.

“This suggests that the decline of about 23% from all-time highs is not a larger trend reversal. Since November 10 (ATH day), there has been $ 968 million in liquidations.

This chart shows the dollar value of liquidations (both daily and total) since November 10, when … [+] bitcoin hit its all-time high.

Graphic provided by Konstantin Anissimov of CEX.IO.

Finally, Anissimov spoke about market sentiment.

He mentioned the “BTC Fear and Greed Index” provided by alternative.me, pointing out that it was at 27 when he provided this contribution. The number had increased to 33, a number that also indicated fear, as of this writing.

“BTC has oscillated between fear and the index’s extreme fear level, which is usually the case after weak-handed holders have left the market.”

Alternative.me’s Fear & Greed Index shows the sentiment surrounding “Bitcoin and others … [+] large cryptocurrencies “is scary.

This photo comes from the alternative.me site. Other key variables

In addition to highlighting the key support provided near the $ 53,000 level, LeClair highlighted several important factors that market watchers should watch for going forward.

He addressed the derivatives market, noting that “although a full wave of biased long derivatives has yet to occur, funding on perpetual swaps remains moderately high, but nothing too extreme or of concern. “.

“The macroeconomic backdrop and the potential for the Fed to delay reducing the current pace of balance sheet expansion is something bitcoin traders are watching closely,” LeClair added.

“In addition, a rise in the dollar against other foreign currencies, as shown by the dollar currency index (DXY) during 2021 is also important and should be watched closely.”

Disclosure: I own bitcoin, bitcoin cash, litecoin, ether, EOS, and soil.

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