Yesterday’s weekly close of the Bitcoin price below the $26,000 mark has raised concerns among analysts and traders. This move could potentially signal a further decline for the leading cryptocurrency, as it appears to be the first step to confirming a double top formation on the weekly chart.
Rekt Capital, a prominent figure in the crypto analysis sphere, took to Twitter to share his insights, stating, “BTC has officially Weekly Closed below the ~$26,000 support. Technically, BTC has begun the first step in the process of validating this Double Top formation. Turn $26,000 into new resistance and the breakdown will likely be confirmed.”
How Low Can The Bitcoin Price Drop?
Remarkably, this isn’t the first time Rekt Capital has voiced concerns about this price level. Already on August 7, the analyst warned, “If BTC drops to $26,000 by mid-September then a Double Top may be forming. A breakdown from $26,000 would validate the Double Top.”
Diving deeper into potential price movements, Rekt Capital has speculated that a breach of the $26,000 base could see Bitcoin tumble towards the $22,000 region. The analyst emphasized the importance of observing the price action this week, noting, “if we see a weekly close below $26,000, followed by a rejection from $26,000, then we probably see a confirmed breakdown from this double top.”
However, it’s not all gloom and doom. Rekt Capital also highlighted the dangers of getting overly bearish, advising traders, “So it’s really important not to get caught in these downside wicks (below $26,000).” On a brighter note, the analyst pointed to the inverse head and shoulders pattern on Bitcoin’s weekly chart which played out in mid-March this year, suggesting that a retest of its neckline, around $24,000, might indicate the bottom of Bitcoin’s upcoming move.
Decentrader, a crypto intelligence platform, weighed in on the current market conditions, tweeting, “The market is currently experiencing the most sustained period of #bitcoin on-chain losses since the bear market lows. Is this a buy the dip opportunity or the start of a deeper pullback?”
They further highlighted potential price movements, stating, “Bitcoin Liquidity Map: There is a significant amount of 3x, 5x, 10x liquidity from $23,500 down to $21,600. IF price did get down to $23,500 we could see a fairly swift liquidity escalation event that could move price down fast.”
Michaël van de Poppe, another esteemed analyst, provided a comprehensive historical perspective. He emphasized the significance of September as a historically challenging month for Bitcoin, stating, “There’s a level which #Bitcoin must hold in order to avoid a significant crash. Bitcoin is currently holding onto a significant level of support. It’s around the $25,500 barrier.”
Van de Poppe delved into the historical and cyclical aspects of Bitcoin’s price movements. He highlights that the months of August and September, especially in a pre-halving year, have traditionally been tough for Bitcoin. In August 2015, Bitcoin experienced a substantial correction towards the 200-EMA but managed to stay above it. A similar pattern was observed in August 2019, with a significant correction followed by a smaller one in November 2019.
Drawing parallels between the current market cycle and that of 2015, van de Poppe suggested that given the influx of new institutional participants, the current market could be mirroring the 2015 cycle. If this correlation holds, the current downturn could be the final correction before a potential rebound.
At press time, BTC traded at $25,692.
Featured image from iStock, chart from TradingView.com