BTC Breaks Back Beneath $40,000 But Remains Inside Short-Term Rising Price Channel – Will It Hold?

*Price at the time of publication

Bitcoin is down another 4,2% today as the cryptocurrency starts to fall lower beneath $40,000. The coin had surged higher from $35,000 at the start of the week as it managed to break resistance at $40,000 and reach as high as $42,326. There, it met resistance at the upper boundary of a bearish .382 Fib Retracement level and started to head lower again.

With the latest price drops over the past three days, BTC is attempting to stay above a short-term rising price channel as the bulls battle to defend the lower boundary at around $37,400.

Unfortunately, the worst part of the recent sell-off might still be on the way. Data from Santiment shows that BitMEX traders are continuing to keep Bitcoin’s funding rate at negative levels and is currently the lowest level seen in over 14-months.

This indicates that short sellers on BitMEX are the most confident they have been in over a year for shorting the market and might be increasing their selling positions as they expect BTC to continue lower. 

However, Santiment is actually seeing this as a potentially bullish signal moving forward.

? #Bitmex traders are continuing to short #Bitcoin in large quantities, at the most #bearish ratio since April, 2020. This is a great sign for those waiting for markets to turn upward again. Prices tend to increase when crowd #FUD begins to take hold. https://t.co/yIlYdMpHPQ pic.twitter.com/AHyPXWsTfg

— Santiment (@santimentfeed) June 17, 2021

In their tweet, Santiment stated that prices tend to turn upward when the crowd FUD begins to take hold. The previous history implies that after each significant funding rate drop, the price of BTC starts to move higher. If this is true, we could expect a short squeeze on the way and the cascade of closing sell orders (by opening buy orders) could send BTC soaring. 

Dan Morehead, CEO of Pantera Capital, also believes that Bitcoin is relatively “cheap” right now. In fact, Morehead states that BTC has only been this cheap relative to its trend for one-fifth of the past 11 years.

For new investors, it’s best to buy when the market is well below trend. Now is one of those times.#Bitcoin has only been this “cheap” relative to its trend 20.3% of the past 11 years.

More perspectives on market timing in our June investor letter: https://t.co/AOvhFyxBJh pic.twitter.com/2bsxbw5Iay

— Dan Morehead (@dan_pantera) June 16, 2021

The recent price hike has allowed the market cap of BTC to surge back to $707 billion.

Let us take a quick look at the markets and see where we might be heading.

Bitcoin price analysis

Daily chart

What has been going on?

Taking a look at the daily chart above, we can see BTC finding support at $33,200 last week, provided by a .886 Fibonacci Retracement level. The cryptocurrency rebounded from this support and started to push higher toward the $37,000 resistance and the 20-day MA.

At the start of this week, BTC broke above the resistance at the 20-day MA and penetrated above a falling resistance trend line. It surged higher from there and continued upward until reaching the resistance at $41,326 (bearish .382 Fib Retracement). 

Unfortunately, it was unable to overcome the $41,326 resistance and headed low It is now currently trying to hold the support at $37,700 – which is the Point of Control (POC) on the VPVR since the start of April. This shows that the most volume since April was traded and accumulated at this price level.

Lastly, for the daily chart, it is important to note that BTC broke beneath the 20-day MA again yesterday.

4-hour chart

Looking at the 4HR chart above, we can see that BTC is actually trading inside a rising price channel and is testing the lower boundary of the channel today. It also shows that the push higher into $41,326 was actually just a spike higher and BTC was never really able to close above resistance around $40,600.

Additionally, the support at the lower boundary of the price channel is further bolstered by short-term support provided by a .382 Fib Retracement level at $37,382.

Bitcoin price short-term prediction: Neutral

BTC continues to remain neutral right now. To turn bullish in the short-term, BTC would have to break above the cluster of resistance on the way toward $42,000. On the other side, it would need to close beneath the support at $30,800 to be in danger of turning bearish in the short term.

If the sellers push lower, the first support lies directly at $37,380 (.382 Fib Retracement) and the lower boundary of the price channel. This is followed by support at $37,000, $36,170 (.5 Fib Retracement), $35,000 (.618 Fib Retracement), and $34,000. Additional strong support lies at $33,200 (.886 Fib Retracement). 

Where is the resistance toward the upside?

On the other side, the first level of resistance lies at $40,000. This si followed by $41,100 (200-day MA), $41,326 (bearish .382 Fib Retracement), and $42,000 (50-day MA).

If the bulls can clear this cluster of resistance, additional resistance lies at $444,800 (bearish .5 Fib Retracement), $46,000, $46,950, and $48,310 (bearish .618 Fib Retracement).

Keep up-to-date with the latest Bitcoin price predictions here.

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