Bitcoin (BTC) price analysis 22 Nov: Is a drop to $50k possible?
Bitcoin (BTC) could witness a deeper correction as traders sell on rallies
Nayib Bukele, the President of El Salvador, recently announced the launch of a “Bitcoin city” during a Bitcoin Week Conference.
The proposed crypto city would be funded initially by bitcoin (BTC) bonds worth $1bn (£74.2m, €866.2m). Bukele said the public infrastructure is expected to cost around BTC300,000 and the city will be powered by natural geothermal energy sourced from a volcano.
Samson Mao, Blockstream’s chief strategy officer, said during the conference that bitcoin bonds worth $500m would be locked in for five years, thus reducing the number of bitcoin in circulation.
However, in the near term, market participants seem to be most concerned about a Japanese court’s ruling approving the plan to repay the creditors of collapsed Tokyo-based cryptocurrency exchange Mt Gox.
Matthew Dibb, chief operating officer at the Singapore-based crypto asset manager Stack Funds, told Reuters: “Those affected will receive a large sum of bitcoin, likely happening in Q1 or Q2 of 2022. This has brought some fear into the market on a longer-term horizon.”
Is the corrective phase over, and will bitcoin go up? Let’s see what charts project. Read our BTC price analysis to find out.
Bitcoin price technical analysis: weekly chart
The bears will now try to pull the price to the 20-week exponential moving average (EMA), which is an important level to keep an eye on. A strong rebound off this support will suggest that sentiment remains bullish and traders are buying on dips.
Alternatively, if the price breaks below the 20-week EMA, the pair could drop to the 50-week simple moving average (SMA). Since May of this year, the bulls have repeatedly bought the dips to the 50-week SMA. Therefore, it becomes an important support for the buyers to defend, because a break below it could signal a possible trend change.
On the upside, the zone between $65,000 and $69,000 will continue to act as a stiff hurdle. The bulls will have to push and sustain the price above this overhead zone to indicate the resumption of the uptrend.
The bitcoin price analysis shows that traders are booking profits above $65,000 and a drop to the 20-week EMA is possible.
Bitcoin price technical analysis: daily chart
BTC’s price broke and closed below the 50-day SMA on 18 November. The bulls tried to push the price back above the 50-day SMA on 20 and 21 November but were unsuccessful. This indicates that sentiment has turned negative and traders are selling on rallies to the overhead resistance levels.
The moving averages are on the verge of a bearish crossover and the relative strength index (RSI) is in negative territory, indicating that bears are in control. If sellers sink the price below $55,630, the pair could drop to $53,000 and later to $50,000.
The bulls are expected to defend this support zone with vigour because a break below it could result in panic selling.
Alternatively, a break and close above the moving averages will indicate that the correction may be ending. The pair could first rally to $65,000 and then challenge the all-time high at $69,055.
Bitcoin: Buy or sell at current levels?
The bitcoin price analysis shows that the price has broken below the moving averages and the RSI is in negative territory, indicating that the bears have the upper hand over the short term.
The next support on the downside is $53,000 and then $50,000. This negative view will invalidate if the price turns up and closes above the moving averages.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.