Key Takeaways:
- Bitcoin price might be heading for a fall as several traders issue ‘nuke’ warning
- BTC is trying to stay above the $27,000 support level
NEW DELHI (CoinChapter.com) — Bitcoin (BTC) might be heading for a major price correction, warn several analysts, as the world’s largest cryptocurrency struggles to hold above the $27,000 support.
Analysts issued a nuke warning for BTC prices. A nuke is a sudden depreciation in an asset’s price, often more than 10%. Independent market analyst PostyXBT noted that the $27,000 support is the “bulls’ last hope,” adding to a previous argument that BTC price might not be able to reclaim the support level.
Moreover, the analyst had stated in a previous tweet that he would likely go for a short position against BTC price. Another trader agreed with PostyXBT, claiming the dip might not be over and there was a decent chance of Bitcoin price dropping further.
Crypto analyst TraderSZ stated that things were “not looking good” for BTC price unless bulls manage to hold on to $27,000. Moreover, TraderSZ set a target near $23,000 for Bitcoin should the immediate support fail.
Interestingly, Bitcoin deviated from its bearish structure to start a rally in March. As a result, some traders are hopeful of the BTC price action painting a similar recovery. However, PostyXBT noted that BTC’s current price structure did not support the hypothesis.
Macro Issues Might Hurt BTC Price Rally
Crytoquant’s market analyst MAC_D stated in a note that Bitcoin’s recovery faced several roadblocks. MAC_D highlighted the decline in US BTC holdings. The analyst stated that an increase in US institutional investors’ BTC holdings often coincided with a price rally for the crypto asset.
However, the US SEC’s ongoing regulatory war on crypto assets and entities has driven institutional business away from the US. As a result, recent months saw a steady decline in BTC holdings in the US.
Also Read: Tether Becomes an Official Bitcoin Bull, Plans to Buy BTC Every Month
Second, the pseudonymous analyst noted that the total supply of stablecoins has declined. Since traders often use stablecoins to purchase crypto assets like Bitcoin, the total supply of stablecoins is an indicator of the market’s buying power.
Stablecoin supply declined to $71.1 billion in May 2023, a fall of over 28% from Feb 2022’s ATH of $99 billion.
The analyst also highlighted the lack of “new smart money players” from the Bitcoin markets. MAC_D noted that the recent recovery in BTC price was likely due to supply and demand factors. Furthermore, long-term holders started capitalizing on BTC’s highest profit ratio in 2023, increasing the selling pressure.
Cryptoquant noted that the exchange whale ratio spiked in early May. The indicator measures the ratio between the sum of the top 10 exchange inflows and the total exchange inflows.
The spike in the ratio suggests whale wallets took the lead in depositing BTC on exchanges, an indicator of selling pressure in the market.
BTC Price Closes Above $27,000, But Bears Are Moving In
Meanwhile, BTC price closed above $27,000 on May 17, as bulls aggressively defended the key support level. The long lower wick on BTC’s daily candle is evidence of the bulls’ efforts.
However, bears are increasing the selling pressure on May 18 to defend the 20-day EMA (red wave) and 50-day EMA (purple wave) resistance confluence near $27,000. Breaking above the EMA resistance could infuse confidence in BTC price action and help the token invalidate analysts’ price nuke predictions.
If bulls needle above the EMA resistance, BTC price would need to conquer the $28,770 resistance level to begin a strong rally. The token’s bull run might next face resistance near $30,640 as traders could begin booking profits and increase the selling pressure.
Conversely, a downtrend would likely see BTC price testing the $27,000 support level. Failure of the immediate support level might confirm the price nuke prediction. However, bulls might try to defend the 200-day EMA (green wave) support level near $25,000 to arrest the fall in BTC price.
The relative strength index for BTC remained neutral, clocking at 44.28 on the daily charts.
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