In a recent technical analysis, renowned crypto expert Alan Santana delves into Bitcoin’s price action, shedding light on the cryptocurrency’s current market structure, key support levels, and potential downside risks.
As Bitcoin continues to chart its course through uncharted waters, Santana’s insights provide valuable guidance for investors and traders seeking to make informed decisions in this dynamic market.
What you'll learn 👉
The $50,000 Level: A Fleeting Milestone
Santana points out that Bitcoin has never truly established a significant accumulation, consolidation, or distribution phase around the $50,000 level. Despite briefly touching this psychological milestone, the cryptocurrency has not built a strong foundation at this price point, indicating that it may not serve as a reliable main support level.
“There has never been a Bitcoin at $50,000!” Santana emphasizes, underlining the lack of a sustained presence at this price level. While $50,000 may act as an initial support, Santana suggests that it is unlikely to withstand significant selling pressure.
Head and Shoulders Pattern and Fibonacci Retracement
Upon closer examination of the chart, Santana identifies a head and shoulders pattern forming around the $50,000 level in late 2021. This classic reversal pattern, in conjunction with the 0.382 Fibonacci retracement level, suggests that Bitcoin may be prone to a strong drop in the near future.
Santana’s analysis highlights the potential for a more pronounced downside move, as the chart structure points towards a deeper correction. Traders and investors should be prepared for the possibility of a significant pullback, as the $50,000 level may not provide the necessary support to prevent further losses.
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Show more +The $40,000 to $44,444 Range: A Critical Support Zone
In search of more robust support levels, Santana identifies the range between $40,000 and $44,444 as a crucial area of interest. This range holds particular significance for several reasons:
- Bitcoin experienced a consolidation phase within this range during late December 2023 and January 2024, signaling heightened market interest and activity.
- The 50-day and 100-day Exponential Moving Averages (EMA50 and EMA100) are situated within this range, offering additional technical support.
- The 0.5 and 0.618 Fibonacci retracement levels also reside within this range, further emphasizing its importance as a potential support zone.
“This range between 40,000 and 44,444 also holds EMA50, EMA100, 0.5 & 0.618 Fib. retracement levels; this is the main target,” Santana explains, underlining the significance of this price range. Traders and investors should closely monitor Bitcoin’s price action around these key levels, as a breakdown below this range could signal a more severe downtrend.
Preparing for the Unexpected: Lower Targets and Black Swan Events
While Santana considers the $40,000 to $44,444 range as the primary target for a potential correction, he also acknowledges the possibility of even lower prices in the face of unforeseen market shocks or black swan events.
“Lower cannot be for whatever reason, but just imagine when the news breakout that some major city has been blown up, or the exchanges, the SEC, the banks and so on,” Santana cautions, highlighting the potential impact of geopolitical tensions, regulatory crackdowns, or major security breaches on Bitcoin’s price.
In such scenarios, the cryptocurrency could potentially test lower support levels, emphasizing the importance of risk management and maintaining a long-term perspective.
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