Reading time: ~2 m
One of the most popular cryptocurrency analysts on Twitter warned that bitcoin could briefly drop 28% below the 200-week moving average.
On May 24, Rekt Capital, which has more than 300,000 followers on Twitter, published the results of its study of the reaction of the price of bitcoin to the 200-week moving average (200WMA).
He explained that the 200WMA plays the role of an ever-growing latest support that has never before in Bitcoin’s history been breached in such a way as to become resistance. Currently, the level of 200WMA is at around $ 22 thousand.
Rekt Capital noted that in the past, bitcoin fell below 200WMA, but these periods of surrender were very short-lived. The weekly candle has never closed below this critical support, but its shadows reached 28%. If such a squiz is repeated now, the cryptocurrency rate will be at the level of $ 15.5 thousand.
“Bitcoin tends to cast shadows about 14-28% below the 200WMA. And since 200WMA now corresponds to $ 22,000, a shadow of 14% below 200WMA will lead to a price of about $ 19,000, “the analyst wrote.
If bitcoin reproduces a deep drop below 200MA, which was observed in March 2020, then the price will be $ 15,500.
A 1-week chart of Bitcoin and a 200-week moving average. Analytics at Rekt Capital
Earlier, Rekt Capital studied the history of bitcoin for the dependence of the magnitude of the price drop on the “death crosses” that occur after historical highs. The “death cross” is a well-known bearish signal that occurs when the 50-day moving average crosses the top-down longer-term 200-day moving average.
The analyst found that a price decline after the “death cross” tends to reproduce a price decline from an all-time high to the moment the “death cross” occurs. Thus, he calculated that bitcoin could fall by about 43% from the last level of the “death cross”, registered on January 14, 2022. This equates to $22,700, which is the same as the current value of 200WMA.
1-day bitcoin chart. Analytics at Rekt Capital
#Bitcoin #fall #tests #critical #level #support
