Bitcoin’s price has been going through a significant drop over the last couple of days, losing a key support level.
However, there is still a good chance for the market to rebound soon.
Technical Analysis
By Edris Derakhshi (TradingRage)
The Daily Chart
On the daily chart, the largest cryptocurrency has been dropping rapidly this week, breaking below the key $92K level and turning it into a resistance. Currently, the 200-day moving average, located around the $82K mark, seems to be the next target for the price.
However, the RSI has entered the oversold region, indicating that the market is becoming oversold, and it could only be a matter of time before it experiences a rebound or at least a short-term bullish reversal. However, for the first scenario to materialize, the asset should first break back above the $92K level.
The 4-Hour Chart
Looking at the 4-hour chart, it is evident that the price has been making lower highs and lows over the last couple of months since getting rejected by the $109K resistance level.
While both the $100K and $92K levels have been lost, the price might still drop lower toward the $80K line in the coming weeks. Yet, with the RSI showing a clear oversold signal, a pullback or consolidation looks likely in the short term.
Sentiment Analysis
By Edris Derakhshi (TradingRage)
Open Interest
As Bitcoin’s price has been dropping over the past few days, many futures market traders are now beginning to lose their patience and liquidate their longs or even getting wrecked automatically. This can be seen in the open interest chart, which measures the number of open future positions.
The chart demonstrates a gradual decline in open interest during the recent correction. Meanwhile, the magnitude of the drop in OI could have been much bigger, as the market has already lost a key support zone. Therefore, the futures market can still be considered overheated, and more long liquidation cascades could occur in the short term to push the price even lower.
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Cryptocurrency charts by TradingView.
