- The Bitcoin sell-off continues into its third day
- Bitcoin has lost the 200-day moving average with the collapse of the $40k support
- If Bitcoin closes below this MA, it could open the doors to $34.7k which is the 50% retracement level from the March 2020 bottom
Bitcoin and the crypto markets are once again in the red for the third straight day. The dip was initially catalyzed by the weekend speculation that Tesla had sold its Bitcoin. Elon Musk soon debunked the rumor but Bitcoin has continued to fall to a local low of $36,333 amidst panic selling.
Bitcoin Has Lost its 200-day Moving Average
A quick look at the charts reveals that Bitcoin has lost the crucial 200-day moving average as support. The important MA – in green – can be seen in the chart below. To note is that the moving average coincides with the recently lost support zone of between $40k and $39k.
Bitcoin failing to Regain the 200-Day MA would Open the Doors to $34k
Popular Bitcoin and crypto analyst, MagicPoopCannon, had highlighted the importance of this moving average through the following tweet.
BTC just annihilated the 200 day MA. A daily candle close below it will be bearish AF.
— MAGIC (@MagicPoopCannon) May 19, 2021
Magic went on to warn that if the moving average was not regained, Bitcoin would go on to retest $34.7k where the 50% retrace between the March 2020 low, and the April 2021 peak can be found. His exact statement and a chart demonstrating his forecast can be found below.
BTC has clearly broken the 200 day MA. If we get a daily close below it, my next target is the 50% retrace, at $34,700.
Bitcoin’s ‘Weak Hands’ are Panic Selling
In a recent market analysis of the ongoing trading environment, the team at Crypterium analytics identified panic selling as the root cause of the Bitcoin sell-off. An excerpt of their conclusion can be found below.
All of this reflects the real panic in the markets. This can be seen in numerous crypto trading chats, where participants were rushing to sell their positions.
An interesting fact is that the volume of liquidations this fall was just over $1 billion. It turns out that in the last 3 major collapses, the volume of liquidations has been systematically decreasing. This indicates that “weak hands” are being knocked out of the market. Ultimately, such situations lead to growth.