Bitcoin Must Hold Support After Dipping Below $30,000

Key Takeaways

• Bitcoin and Ethereum kicked off the weekly trading session in a precarious position.
• The bulls must hold BTC above $29,600 to avoid a 40% price drop.
• ETH needs to keep $1,700 as support to prevent a test of the 2018 all-time high.

Roughly $98 billion was wiped off the entire cryptocurrency market in the past 24 hours as Bitcoin dipped below $30,000, while Ethereum reached $1,700. The leading cryptocurrencies may be poised for lower lows.

Bitcoin Sits On Thin Ice

Bitcoin and Ethereum could be facing further downside after suffering a significant dip yesterday.

The top-ranked cryptocurrency endured a two-month-long consolidation period after the 54% decline it experienced between mid-April and May. While its price made a series of lower highs since then, the $29,600 support level managed to prevent Bitcoin from a steeper correction.

Such price behavior appeared to have formed a descending triangle on BTC’s one-day chart. A horizontal line can be drawn along with the swing lows, while a descending trendline developed along with the swing highs.

A spike in selling pressure for Bitcoin pushed it below the $30,000 mark to retest the triangle’s X-axis. Bitcoin appears to be at risk of a 40% price crash to $17,650 if the $29,600 support level fails to hold.

This target is determined by measuring the distance between the two highest points of the triangle and adding it to the breakout point.

Based on IntoTheBlock’s In/Out of the Money Around Price (IOMAP) model, the underlying support level could be too weak to prevent further losses. The asset’s transaction history shows that the most significant concentration of buyers sits between $26,120 and $27,000.

At this level, approximately 75,000 addresses have purchased nearly 170,000 BTC. This is the only significant demand barrier that could absorb some of the recent selling pressure.

The IOMAP reveals that Bitcoin faces multiple layers of resistance that could prevent it from recovering anytime soon. One of the most crucial supply barriers lies between $33,250 and $34,200, where nearly 1 million addresses bought over 715,000 BTC.

Given the strength of this resistance wall, only a daily candlestick close above the price level could prevent Bitcoin from continuing its descent toward $17,650.

Ethereum Finds Strong Foothold

Ethereum has been in a downward trend since it reached a new all-time high of $4,370 in mid-May. The smart contract platform plummeted by more than 60% to hit a low of $1,700 on June 22. Although prices have recovered over the past month, a rejection from the 50-day moving average on July 7 has spelled trouble for ETH.

Failing to claim the 50-day moving average as support pushed the asset below several vital areas of support. These include a rising trendline that formed following the “Black Thursday” crash of March 2020 and the 200-day moving average.

Now, ETH appears to have found a strong foothold around $1,700.

IntoTheBlock’s IOMAP adds credence to the importance of the $1,700 level for Ethereum’s uptrend. Based on this on-chain metric, over 355,000 addresses have previously purchased nearly 9 million ETH around this price point.

Such a massive demand barrier could absorb any further downward pressure, as holders who bought in that range may want to prevent their investments going “Out of the Money.” It’s possible that they could buy more tokens to help prices rebound.

If buy orders pick up at this crucial demand wall, Ethereum could have an opportunity to rebound toward $2,000 as the IOMAP shows no critical supply barriers in-between.

Nonetheless, if further selling pressure pushes Ethereum below $1,700, it would likely lead to further losses. ETH could get exposed to another leg down toward the 2018 all-time high of $1,440 or even the $980 level if it breaches this major support area.

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