What\’s Next For Bitcoin After It Fell To $42,000 And Recovered?

Bitcoin prices have had a turbulent 48 hours.


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Bitcoin prices have suffered some intense volatility lately, falling to their lowest since September.

The digital currency reached $42,019.86 yesterday, CoinDesk figures show.

At this point, the cryptocurrency was down close to 40% from the all-time high of nearly $69,000 it reached last month, additional CoinDesk data reveals.

When explaining this sharp decline, several analysts pointed to spot selling. The downward price movement that resulted fueled a long squeeze, creating further losses, CoinDesk reported.

Since that time, the digital asset has bounced back, repeatedly moving toward $50,000 both yesterday and today.

[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Following these latest price movements, several technical analysts weighed in on the key levels of support and resistance that market observers should watch going forward.

Crucial Resistance Levels

Ben McMillan, CIO at IDX Digital Assets, commented on the matter, stating that \$50k will be a key psychological level that bitcoin bulls will be eyeing to see if bitcoin can bounce back into $50k territory quickly and hold.”

“After that, $53k has been the key level that saw some resistance back in September as well as during the rally in October,” he stated.

Armando Aguilar, vice president of Digital Assets Strategy for Fundstrat Global Advisors, also pointed out the key levels bitcoin could hit if it keeps rising.

“Tradingview.com indicators show us that [the] resistance area is at $52k – $53k, if resistance breaks those levels we see the next resistance level coming around $57k-$58k.”

Aguilar also spoke to recent improvement in the Relative Strength Index, a momentum indicator that analysts use to get a better sense of whether an asset is either oversold or overbought.

“RSI saw a higher low despite the market downturn,” he stated. “This is important because it provided a good sign for the speed of recovery.”

Important Support Levels

Experts also shed some light on where bitcoin could go if traders push it lower.

“As predicted, after breaking below the daily Ichimoku cloud, Bitcoin\’s price touched on two out of three key psychological levels traced by Fibonacci on Saturday before correcting some of the losses,” said Kiana Danial, CEO of Invest Diva.

The indicator she mentioned, the Ichimoku cloud, takes several averages and incorporates them into a single chart, which then displays an asset’s trend, momentum, support and resistance.

“On Sunday, the BTC/USD pair opened below the 50% Fibonacci retracement level of $49,500,” she stated. “This indicates the bearish momentum has not completely stopped yet.”

“The key support levels following the Fibonacci retracement strategy are now at $44,800 and $40,700, with the neckline of the potential long-term double top chart pattern laying on $31K.”

McMillan also commented on important price levels the world’s most prominent digital currency could encounter if it pushed lower.

“On the downside, $47-$48k is the support level that bulls would want to see hold. If bitcoin breaks back below that threshold, then it could re-test $40k-$42k quickly,” he stated.

Aguilar also offered some input on the matter, noting that “Traders should keep a close eye on resistance levels of $52k – $53k as it may lead to market over reaction and retest levels in the mid $40ks.”

Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, provided additional perspective on bitcoin’s recent price movements and outlook, suggesting that traders use a “wait and see” approach in a tweet she posted yesterday.

“An overnight downdraft has #bitcoin below widely watched $53K support – rarely a good idea to sell into this kind of move, rather wait to see if the breakdown is confirmed (we will know by Monday),” she wrote.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.