- Bitcoin’s drop to $17,600 yesterday has been followed by an unconvincing bounce
- It failed to reclaim support at $18,600, suggesting that more downside will follow
- $17,600 and $16,500 are in play as key support levels.
Bitcoin’s dip yesterday has been followed by a swift rejection of previous support on the first attempt, leading to the likelihood of further downside. The fall to the $17,600 support level has been followed up by a failed attempt to reclaim support at $18,600, putting $16,500 in play if the $17,600 is lost.
$18,600 Rejection is Bad News for Bitcoin
Bitcoin has been respecting an upward trajectory since the end of October, a trend that was kept intact following yesterday’s dip to $17,600:
However, December has seen the general trend reverse since topping out at all-time highs on several exchanges at the end of December:
Yesterday’s dip took Bitcoin below the crucial $18,600 support level it had tested on two previous occasions, placing huge emphasis on how it would respond. Unfortunately for bulls, Bitcoin was unable to break back above that support zone, which has now turned back into resistance:
This clear rejection means that we can expect further downside and another test of the long trend line at around $18,000. The next natural support area is the $17,600 region we tested yesterday, with $16,500 the next support after that. This would represent an incredible buying opportunity and might lead to a short term alt rally while Bitcoin settles.
Bulls Have Hope
The only invalidation to the bearish thesis is if Bitcoin retests and breaks through the new resistance at $18,600 and turns it into support again. Only once this happens can we consider another attempt on $20,000, as this would represent a strong level of support in keeping the run going.