- The Bitcoin has been in a downtrend since November last year
- Price is approaching an important band that could act as make or break
- The $30,000-$32,000 region will prove pivotal for two reasons
The Bitcoin price has been in a downtrend since November last year, with recent global events pushing further losses onto it. With plenty of doom and gloom around regarding where the Bitcoin price may go, there is some hope that a particular range that may not be too far away will offer strong support. In this analysis piece we look at why the $30,000-$32,000 might be the point at which those on the sidelines might consider stepping back into the market.
Bitcoin Needs $30,000-$32,000 Level to Hold
The first reason why the $30,000-$32,000 area could be a sweet spot is because of where it falls in an almost 10-year Bitcoin trendline:
As we can see, Bitcoin has held this trendline since June 2012, even through its darkest days. Such a strong long term support line cannot be easily ignored as it reflects the point at which buyers have stepped in en masse, driving a reversal in price on both occasions in which it has hit.
Looking a little closer we can see where this might come:
On the daily time frame we can see that this support line is already crossing the $29,000 line, meaning that the $30,000 threshold is not far away at all. With equities markets still shaking from Russia’s recent invasion of Ukraine and the Federal Reserve preparing to power up the money hoover next month, there is very good reason for thinking that the Bitcoin price will come down to this level in the not too distant future.
The last time price hit this trendline was in the March 2020 crash, and Bitcoin didn’t fare too badly from there…although of course things are a little different this time round.
A Bear Market Lurks Beneath
We can also see another way in which $30,000-$32,000 region is of significance for Bitcoin:
Ever since late 2020 when the Bitcoin price crossed this threshold it has acted as support – once in January 2021 and again in July. It is clearly then a very important area of support for Bitcoin and we should expect some strength in this region, although a quick rebound is probably unlikely.
We could well see some wicks below this price band as leverage traders take liquidity, but price should stabilize around this area over time, barring any huge escalations in global events.
Were Bitcoin to breach this important price band then we could be looking at a more prolonged period of negativity and stangation, potentially ushering in a full blown bear market if it doesn’t recover quickly. If history is our guide however, this should turn out to be an area of strong interest.
