Bitcoin’s price has fallen almost vertically over the past few days, with multiple rejections from its 100-day and 50-day moving averages.
The $30,000 demand area, which was considered significant enough to reverse the downtrend and start an uptrend, also failed and moved lower.
Bitcoin is currently trading at around $28,000 and is massively oversold as indicated by the RSI indicator below 30%. Indeed, the RSI reached its last confirmed value during the May 2021 crash. The price could be bullish in the near term and retest the broken $30,000 level.
However, it is likely to continue falling towards the $24,000 and potentially $20,000 levels, which could finally mark a mid-term bottom. The 50-day and 100-day moving averages can also create bearish crosses, increasing the likelihood of a price decline in the near term.
4 hour chart
Over the course of 4 hours, the price has fallen below the large bearish flags formed over the past few months, confirming a bearish continuation scenario.
The $30,000 demand area provided support for the short term but failed shortly after signaling a bearish continuation as a symmetrical triangle pattern formed. The bearish trend is now showing signs of depletion, with the last two candles closing with a downtrend.
The RSI is also attempting to break through the oversold zone. This signal could be bullish in the near term to the broken $30,000 level. However, the bearish is fully under control and is likely to eventually break down to the $24,000 level.
Bitcoin open interest
Bitcoin’s price has plummeted rapidly over the past few weeks and has hit its bottom in 2021 ($28,000).
The futures market certainly played a major role in this massive decline as Bitcoin’s open interest was very high despite the price falling from $48,000 to $37,000 during April. The slow decline in open interest during the roughly 20% decline indicates that many of the long stop-loss and liquidation targets are below the $37,000, $33,000 and ultimately $28,000 support levels.
After the price fell below this level, many long positions were liquidated, creating a liquidation cascade, adding to selling pressure and leading to a stronger downtrend. However, open interest is still much higher than it was in May 2021 after crashing from $64,000 ATH, which shows that the futures market is still overheating after the recent downtrend.
This can be interpreted as a bearish signal as high open interest usually results in high volatility.
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