Starting on Monday 21st of September, Bitcoin broke the $10,250 and $10,200 support levels to move deeper into the bearish zone. It failed to correct the value drop and continued to go further below $10,200 against the Dollar, recording an overall decline in value of 4.5%.
This is the largest single-day decline since the beginning of the month and came as a result of the renewed Covid-19 fears and the many questions surrounding the upcoming US elections. What’s more concerning, Bitcoin remains at high risk of moving below $10,000 in the near future. So, will it be able to correct higher and mitigate the current losses? Read our take on it.
The Current Market Situation
The BTC/USD pair is currently correcting upwards, though the support near the $10,300 and $10,450 levels could prevent the further gains for the pair. The cryptocurrency even dropped below the $10,200 support level, eventually falling below its 100 simple moving average fluctuations. It also set a negative benchmark record for the week, breaking the 23.6% Fib retracement level of the latest fall, going from the $10,528 high to the $10,135 low. After this, Bitcoin attempted another surge to clear the $10,500 major resistance zone but failed.
As a reminder, Bitcoin already saw a big decrease in value, falling from $12,000 to $9,000 back in the second half of July this year. Since then, the DXY has been largely restricted to a range between 92 and 94. This is mainly because a move above 94.00 would confirm a solid breakout and weight over Bitcoin, which would lead to continued selling and further pressure on the leading cryptocurrency.
Historically looking, September and October are generally very rough months come election year in the US. While Nasdaq is on its way up and recovering, Bitcoin, as well as both silver and gold, are still trading further down this month. It wouldn’t be surprising if Bitcoin continues on its steady decline in the next few weeks, as the overall uptick can be expected once the US presidential election concludes in the next couple of months.
Extended Losses Looking Likely Soon?
Looking at the latest technical indicators, you might rightfully think that more losses are predicted in BTSs near the future. The hourly MACD is slowly going into the bullish zone, while the hourly RSI for Bitcoin/US Dollar is near the 40 levels. With that in mind, if Bitcoin continues to fall and fails to recover its value above the $10,350 and $10,550 level, there’s no way of telling how low will this cryptocurrency go. The next major support is near the $10,200 and $10,100 levels.
But, the main issue is still the resistance that’s around the $10,550 level and the connecting bearish trend line. If Bitcoin’s price remains below the $10,550 level, the crypto will still be at risk of a larger decline in value.
However, it’s important to keep in mind the upside of the current situation. The previous support zone, which was around $10,300, is now acting as a strong resistance. If it manages to hold out the downswing and if we see an upside break above $10,350, the price could quickly recover and go above $10,450. This is all something that should be factored.