The price of Bitcoin (BTC) fell below the psychological level of $ 40,000. The market sentiment gripped the widespread panic and caused many investors to sell their positions which caused the cryptocurrency market to lose $ 450,000 million in value.
After a week of successive falls, on Wednesday morning, Bitcoin reached the minimum $36,531. This fall placed Bitcoin at its lowest level since the beginning of February and 45% below its all-time highs.
On the other hand, the Sichuan provincial government demanded that a temporary power reduction be applied, and the hash power of the entire Bitcoin network was drastically reduced for a time.
According to Nature, the increasing energy consumption and environmental impact of Bitcoin mining have caused problems for many countries, especially China. Due to its proximity to specialized hardware manufacturers and access to cheap electricity, most of the mining process took place in China, which according to the Nature study, accounts for more than 77% percent of the hash power of the Bitcoin network.
According to the 4-hour chart, we note that BTC is facing strong downward pressure, and we believe that it could continue for longer, up to the psychological level of $30,000.
Therefore, as long as BTC on the 4-hour charts trades below the 21 SMA, the bias will continue to be bearish. Therefore, a break below 37,500 will be a good selling opportunity up to the psychological level of 30,000.
The market sentiment index shows that there are 83% of investors who are selling BTC. This is a very negative signal which could cause BTC to fall to levels of $25,000 in the medium term.
Our recommendation is to sell if there is a pullback to $43,750 or a break below $37,500 with targets at $31,150 (1/8 of murray). Above $44,000 we should buy with targets in the area of $50,000.
Support and Resistance Levels for May 19 – 20, 2021
Resistance (3) 41,837
Resistance (2) 40,433
Resistance (1) 38,467
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Support (1) 33,645
Support (2) 29,873
Support (3) 23,327