Bitcoin (BTC) is at a crucial level as geopolitical tensions rise and bearish developments emerge, prompting some analysts to warn of a possible 15% correction if a critical support area fails to hold.
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Bitcoin Eyes channel support for the next step
Following news of renewed US attacks on Iranian targets, Bitcoin fell about 5% from $76,000 to a one-month low of $72,589. At the start of the week, the cryptocurrency was trading between $77,000 and $78,000, after recovering from last week’s pullback. However, growing geopolitical tensions have pushed the price towards a critical area.
Analyst Ali Martinez confirmed that BTC reached a key support zone after losing the $75,000-$76,000 area. He previously said the leading crypto is consolidating within a rising channel that has developed since the early February crash, with two crucial levels likely to determine the direction of its next move.
As he explained, if Bitcoin were to break above the $78,258 resistance, it could trigger a rally towards the $84,000 mark, while breaking below the $75,733 support could push the price to the lows seen in late March and early April.
Now the price is consolidating at the lower limit of the ascending channel, which could set the stage for a 15% decline. According to the post, the bottom of the channel corresponds to the 100-day Simple Moving Average (SMA) and the 23.6% Fibonacci retracement level, making current price levels a crucial area.
“This cluster between $73,000 and $71,300 serves as an important structural floor,” he said, noting that if buyers defend this zone, a “steady expansion back to $77,000 or even $79,500” could be expected.
Rather, he warned that if Bitcoin loses the $71,300 flows, “it would open the door to an extended appreciation window near the February base of $60,000.”
BTC bearish stance signals risk of further decline
Market observer Mr. Crypto shared a bearish view on the flagship crypto, citing a by-the-book bearish formation on BTC’s daily chart. According to the trader, Bitcoin has been forming a head-and-shoulders pattern since mid-April, with the setup price hovering around the $75,000 level.
The chart shows that the cryptocurrency formed the left shoulder during the late April pullback and later developed the upside during this month’s rally. Meanwhile, the right shoulder of the pattern started to form after the rejection by the USD 82,500 resistance.
The trader confirmed that the pattern is playing out “almost perfectly,” which “confirms the bearish thesis” and suggests a drop to lower levels is looming. “Having moved back into range after a $75,000 loss, the likelihood of a move to the lows around $63,000 increases,” the analyst wrote.
This also applies to analyst Daan Crypto Trades noted that Bitcoin “shows a similar reaction after that horizontal level and the daily 200MA/EMA retest compared to January this year.”
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Notably, BTC consolidated above the early November lows for about two months before recovering towards the 200-day Exponential Moving Average (EMA) and the crucial horizontal level of $98,000 in mid-January. The cryptocurrency was rejected from this area and briefly consolidated near local lows before heading to new lows.
Now the price has shown a similar performance, retesting and rejecting both the horizontal $80,000 level and the 200-day MA and EMA. As a result, the analyst believes that BTC “will see another lower high in the larger downtrend until proven otherwise.”
Featured image from Unsplash.com, chart from TradingView.com