After the powerful rally unfolding across the crypto market over the last several weeks, Bitcoin price failed to breach cleanly above $10,000 and hold. The move pushed the first-ever cryptocurrency into a supply zone dating back to the start of the bear market where it was rejected.
The failure will likely result in Bitcoin price returning to one of three demand zones, where the asset will confirm buyer interest before proceeding on a new post-halving bull run.
Bitcoin Price Reaches Bear Market Supply Zone, Can It Finally Get Through?
Bitcoin’s halving is just three days away. A rally may have always been expected, but the power presented by bulls over the last several weeks has been shocking.
And although a pre-halving rally was always anticipated, a sell the news style event was also widely predicted.
That sell the news event may be here, as Bitcoin price has pulled back after its first attempt at breaking $10,000 since the February 2020 top and subsequent Black Thursday selloff.
Bitcoin price was rejected by a supply zone dating all the way back to the start of the bear market in early 2018. This area first acted as support following the break of cryptocurrency’s widely publicized parabolic advance.
This same supply zone then acted as a top to the early April 2018 rally but was later flipped to support in June 2019. When this support ultimately failed to hold, it became resistance after a powerful bearish retest that was known as the “China pump” in October 2018.
Bitcoin price was able to close only one weekly candle above the supply zone in February 2020. It immediately fell back through it and all the way to $3,800.
This latest attempt, however, has a lot more momentum behind it. And with the halving in three days and hyperinflation in USD coming, the perfect storm for Bitcoin to finally get through may be here.
BTCUSD Demand Levels to Watch: Will a Right Shoulder Form?
Demand levels to But for now, Bitcoin price has been rejected and will fall to one of the many well-defined demand zones below. If buyers are ready to front-run any dips, the leading cryptocurrency by market cap may only see a drop to $8,200 before it is off to the races.
Another potential target lies at $7,400. The support acted as the launchpad for the China pump and the early 2020 rally.
Another retest of this level would also form the right shoulder on a massive inverse head and shoulders formation. The target of this bullish bottoming structure would push Bitcoin price back to nearly $14,000 where it would retest the June 2019 top.
A break of that level could send Bitcoin towards its previous all-time high.
It’s worth pointing out, however, that planning for a right shoulder to form is a poor strategy, as can be seen in this below example that analysts were charting just a couple months earlier.
However, a breakdown through any of these outlined demand zones would take Bitcoin price back to $5,300 where the Black Thursday carnage finally reversed. Losing that level would put Bitcoin in serious danger of an extended bear market and now lows. This scenario at this point is unlikely as nearly all of Bitcoin’s fundamentals are currently screaming buy, the asset having bullish interest from the likes of Paul Tudor Jones, and with history showing that in the past, each halving takes the asset to a new all-time high.
Featured image from Pixabay, Charts by TradingView