The crypto markets have been hit by a slew of negative news in the past few days. The sequence started when Tesla backtracked on accepting bitcoin for its vehicle purchases. That was followed by the announcement from the People's Bank of China on 19 May that digital tokens will not be allowed as a form of payment by financial institutions. 

In addition, the news that the US Treasury Department wants transfers worth $10,000 or more to be reported to the IRS suggested the regulations may be tightening across the world. These events have severely affected sentiment as institutional investors are unlikely to invest heavily in an asset that loses 50% of its value within a few weeks.

However, according to Morgan Creek Digital founder and partner Anthony Pompliano,  Bitcoin whales (individuals or entities holding large amounts of bitcoin) have continued to buy during the fall. Referring to Glassnode data, Pomp said that Bitcoin whales, owning between 10,000 and 100,000 bitcoin, bought 122,588 bitcoin during the crash on 19 May. Several crypto hedge funds interviewed by Bloomberg also said they had bought the dip.

After the turmoil, is it time for a pullback or could bitcoin fall further? Read the bitcoin price trend analysis to find out.

Bitcoin price technical analysis: Weekly chart

Bitcoin’s price had been trading between $42,979.50 and $61,777.85 for the past few weeks, before the biggest cryptocurrency plunged 25.15% to end the week at $34,771.95.

The 20-week exponential moving average (EMA) has started to turn down and the relative strength index (RSI) has dipped into the negative territory for the first time since April 2020. This suggests a possible longer-term change in trend.

However, a minor positive is that bull traders defended the 50-week simple moving average (SMA) last week. This indicates traders may be accumulating at lower levels. The bulls will now try to push the price back above the 20-week EMA.

If they succeed, the BTC/USD pair could pick up momentum. But if the price turns down from the 20-week EMA, the pair could remain stuck between the moving averages for a few more weeks.

The Bitcoin price weekly analysis shows the sentiment has turned negative. But is the correction over or could Bitcoin witness another leg down? The BTC price analysis of the daily chart may provide a better insight.

Bitcoin price technical analysis: Daily chart

Bitcoin’s price broke and closed below the neckline of the head and shoulders pattern on 17 May. The bulls tried to push the price back above the neckline on 18 May but the long wick on the candlestick showed selling at higher levels.

That was followed by a sharp dump on 19 May, which sent the pair tumbling down to $28,639.70. However, the long tail on the day’s candlestick suggested aggressive buying at lower levels.

The bulls further built on the recovery on 20 May and pushed the price near the neckline. However, higher levels attracted selling and the pair turned down on 21 May. The downsloping moving averages and the RSI in the negative territory suggest a bear market.

The sellers tried to challenge the 19 May low on 23 May but the long tail on the candlestick suggests traders are buying the dips. The pair could now again try to rally to the neckline where it is likely to face stiff resistance.

A breakout and close above the neckline will be the first indication that the downtrend may have ended. Conversely, a break below $28,639.70 will open the gates for a further fall to $20,000.

How to trade bitcoin this week

After the massive fall of the past few days, bitcoin could witness a sharp rebound but it is unlikely to sustain above $44,000. Buying in a downtrend could result in losses, therefore we suggest positional traders remain on the sidelines until a bottom is confirmed. 

Trade Bitcoin to US Dollar - BTC/USD chart

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