Bitcoin is still relatively volatile. But, experts and analysts believe that bitcoin must overcome a major hurdle before new all-time highs come again into play. The flagship crypto has seen a turbulent few days after the Tesla CEO, Elon Musk showed some support for the crypto amid the GameStop fiasco on the equity markets.
Nevertheless, since that tweet, the price of bitcoin has been correcting after the whole push through Musk was retracted. Since that time, BTC’s price is facing a critical hurdle at the $35,000–$35,200 zone before an all-time high test. If the area breaks and flips for support, continuation toward another all-time high is highly likely.
The 3-hour chart indicates a clear downtrend structure, with the ‘Elon Musk pump’ outlier. Analysts say that the downward structure was established after the peak high of around $42,000 earlier in the year.
This downtrend has recorded lower highs and lower lows, which can be seen in the various market charts. Hence, there is a high possibility that the downtrend will continue. If bitcoin breaks above the $35,000 zone, the $38,000 resistance zone might not pose much of a challenge for the bulls. The next possible major zone of resistance will be around $40,500.
On the flip side, if bitcoin’s price cannot break through the $35,000 area, a renewed retest of the $30,000 area appears on the table. The $30K level has survived many tests since the peak at $42,000 earlier in the year, it is highly likely that the support will be lost this time around. In such a scenario, a further correction to $25,000 is possible.
21-Week MA Is Currently Perched At $21,000
Once more, the only indicator to look out for when analyzing any further corrections is the 21-week moving average (MA). In the past bull cycle, it offered sustainable support for the whole period.
In case the market corrects further, a retest of the past all-time high in 2017 remains quite unlikely. In other words, everyone will be buying there. Therefore, the market is not expected to provide that opportunity.
Thus, the possibility of another correction to the $24,000-$26,000 level remains, and that would also fill a CME gap coupled with a test of the 21-week moving average. But, such type of correction depends on whether the price of bitcoin can break past the $35,000 zone.
Bitcoin’s Bullish Scenario
Detailed scenarios and charts indicate that the crucial area is the $35,000 zone. If it is broken, it will open the door to new all-time highs.
The $38,000 zone might encounter some short-term consolidation. However, since bitcoin has tested it once previously, bitcoin is most likely going to see significant resistance at $40,500. Thus, if BTC’s price breaks past $35K, the $40.5K zone becomes exposed.
Bitcoin’s Bearish Scenario
The bearish scenario also appears straightforward. $35,000 is holding as resistance for further downside.
Notably, the first support has formed around $32,000, which has been tested multiple times and might fail this time around. The next support regions are located at $30,000 and $29,000, which have also been tested multiple times for some support in the market.
A new test and falling through that level would open up the market for further drops to $25,000. If it happens, it would line up with the CME gap and the 21-week MA. In the meantime, every past support zone is confirmed as resistance, with the correction continuing to set new lower highs and lower lows.