- Bitcoin jumped $4,000 last night straight into a 3-week downward trendline
- If it can overcome this trendline then $61,000 is the key area to crack
- A drop below $48,000 would be bad news for bulls
Bitcoin may have experienced a $4,000 pump last night, but it is still facing further declines unless it can overcome a downwards trend line that has set in ever since the $69,000 all time high almost three weeks ago. Even if it can, there is a key level that needs to be overcome if the bull run is to continue, while there is also a critical level that needs to hold if the trendline continues to act as a barrier.
Dire Bitcoin Sentiment Proves Accurate Barometer
Bitcoin sentiment and fear was at its nadir last night, which is usually a recipe for a pump, and so it proved, with Bitcoin enjoying a $4,000 jump to take it temporarily up to $58,000. This may seem like a positive show of strength, but there are two reasons to be cautious.
Firstly, the maxim ‘Sunday pump, Monday dump’ has been one that has held true for some months now, so nobody in the space trusts Sunday pumps anymore, with many expecting Monday morning to bring with it a river of red as has become almost standard practice.
The second reason to worry is that Bitcoin’s $4,000 pump couldn’t take out a downward trendline that has been in play since the $69,000 all-time high on November 10:
Until Bitcoin can convincingly take out this trendline, fears will persist over its upward momentum. If it can’t do this and it retraces Sunday’s gains we can assume that it will seek lower levels, with the weekly timeframe providing a clear must-hold area for bulls:
Consolidation around this area for the next month or two would provide a chance for accumulation before a bigger run into 2022, presuming this is an extended version of the 2013 cycle.
If Bitcoin does manage to get above that trendline however, then we can see that the $60,000-$61,000 area is the crucial level that needs to be overcome for the next leg of the cycle to commence:
Monday will tell us a lot about Bitcoin’s strength going into the end of 2021.