Bitcoin price analysis for May 25-31: the crypto could drop to $8,200 levels this week

The uptrend in Bitcoin has been broken. A few days of range-bound action or a minor correction is likely

Last week, a transfer of 50 Bitcoin had the crypto community scratching their heads because the Bitcoin in question had been mined way back in February 2009. This quickly led to speculation that Satoshi Nakamoto might be the person who had moved the coins. However, subsequently several experts dismissed this idea.

Crypto fund manager Grayscale Investments has seen a steady inflow of institutional money for the past few months. This has resulted in Grayscale buying about one third of all the newly mined Bitcoins in the past three months. This suggests that during the current crisis, the institutions have turned to cryptocurrencies to hedge their portfolio.

The institutional players usually buy from a medium-term to long-term perspective, which is positive for cryptocurrencies. Let’s do the Bitcoin price trend analysis to spot the critical levels where purchases can be done.

Bitcoin price technical analysis: weekly chart

For the past three weeks, the bulls have not been able to scale the price above the resistance line of the symmetrical triangle. This suggests that the bears are aggressively defending this level.

Both moving averages have flattened out and the RSI is just above the midpoint, which suggests a balance between supply and demand.

A breakout of the resistance line of the symmetrical triangle will shift the advantage in favour of the bulls. Above the triangle, a sustained uptrend is likely. 

On the other hand, if Bitcoin breaks below the 50-day SMA, the advantage will shift in favour of the bears and a deeper correction is possible.

Bitcoin price technical analysis: daily chart  

Bitcoin broke below the ascending channel on May 21. The bulls attempted to push the price back into the channel for the next two days but buying dried up at higher levels. 

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On the upside, the bulls will continue to face resistance close to the psychological level of $10,000. As the resistance line of the symmetrical triangle is also just above this level, the bears are likely to defend this level aggressively.

On May 24, the price made a decisive move lower. With the break below the ascending channel, the uptrend has ended. The next support on the downside is the 50-day SMA and below it $8,050.50. 

If the bulls can keep the price above this level, the BTC to USD pair is likely to remain range-bound for a few days. However, if the bears sink the price below $8,050.50, a new downtrend is possible. Below this level, the decline can extend to $7,500 and then to $6,500.

How to trade Bitcoin this week

The trend in Bitcoin has changed from up to range-bound. Therefore, the strategy should be to buy the dips to the strong support level and close the position near overhead resistance levels.

Therefore, traders can wait for the price to bounce off the 50-day SMA or $8,050.50 before initiating long positions. The stop-loss can be placed just below $8,000. Partial profits can be booked at $9,300 and above it at $9,950. Long positions can be avoided if Bitcoin sustains below $8,000.

FURTHER READING: How do crypto exchanges work?

FURTHER READING: Trading Bitcoin for beginners

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