Bitcoin is consolidating after being rejected at the top of its current range, moving towards significant support levels in Tuesday’s market. Although there is some weakness in the market after the correction, the market structure does not depict a breakdown, keeping the market under observation at current levels.
At press time, Bitcoin is trading at $89,725, with a decrease of about 1.17% over the last 24 hours, according to CoinMarketCap. Daily trading volumes are approximately $77.7 billion, and the market cap is at about $1.77 trillion.
This indicates a short-term selling pressure and not a market capitulation, since there is still strong market engagement in spite of the drop in price.
Bitcoin Tests Support Amid Volatility
Crypto analyst, CryptoPulse, says the price of Bitcoin is moving sideways in a broadening price channel, which is often associated with higher levels of price volatility. In the analysis, the website says the current range could lead to a more definitive breakout or breakdown since the range between support and resistance levels will be wider.
Bitcoin has just been rejected close to the top edge of this range, which is in keeping with past price action observed during tests of resistance.
Following this rejection, the price of Bitcoin has started to rotate back to its support. CryptoPulse indicated that there may be one more test lower to the $86,000 to $87,000 region before buyers can step in to buy the cryptocurrency. If a reversal pattern develops around this region, a short-term bounce may occur.
However, the analyst warned that if there is a clean breakdown below the support level, it could pave the way for a more significant corrective move, with the potential to fall to the $75,000 level.
The technical indicators are also cautioning of a warning in the short run. The Moving Average Convergence Divergence (MACD) indicator has formed a death cross, indicating that the momentum has not yet switched in favor of the buyers.
In the meantime, the Relative Strength Index (RSI) is still below the neutral level of 50, suggesting that selling pressure has not abated yet and bullish follow-through is not yet forthcoming.
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Bitcoin Holds Support Near $87,000
Adding more insight, another analyst, GainMuse, has pointed out that Bitcoin is still maintaining strong fundamentals despite the recent retracement. From this analysis, the current period of consolidation may actually be laying the groundwork for the next move, if certain support points are maintained.
The analyst pointed out that the fact that the market moves sideways after such a strong trend does not negate the bullish setup. This is especially true if the buyers hold up the support areas.
For now, investors are concentrating on key price points. Immediate support should hold between $88,000 and $87,000, which will drive Bitcoin’s next short-term move. From this zone, Bitcoin could attempt to push on to the next resistance levels, with the $95,000 zone being the most likely target for an upward move if momentum increases.
While Bitcoin is still range-bound, the next key price level will depend on how the support zone holds and how buyers react to these levels in the coming days.
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