Bitcoin (BTC) starts the second week of May 2022 by bringing up bearish ghosts from its past — how much worse could the picture get for hodlers?
After falling to nearly $33,000, the largest cryptocurrency is giving market participants, new and old, a run for their money, and the fear is palpable.
A brutal combination of macro cues, which are set to continue this week and beyond, forms the backdrop for some historical chart retests that no one wanted to see again.
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As calls for capitulation continue, there is still a lack of agreement about just how far BTC/USD could or should fall to put in a convincing long-term bottom.
Cointelegraph takes a look at factors poised to contribute to market movements in the coming days, as Bitcoin closes in on its 2022 lows.
Whichever way you dice it, there is little to be bullish about when it comes to Bitcoin price charts this week.
The weekly close on May 8 at $34,000 meant that BTC/USD delivered its sixth weekly red candle in a row.
That chart feature has not been seen in nearly eight years — the last occurrence began in August 2014 — data from Cointelegraph Markets Pro and TradingView shows.
Then, as now, Bitcoin was in the second year of its four-year halving cycle, having seen its first blow-off top at just over $1,000 in November 2013. This cycle, however, has been different, as that blow-off top either did not arrive or was a lot more muted than previous cycles.
Meanwhile, macro conditions have taken care of any hope of a late surge among the majority of analysts, who now expect financial tightening by central banks worldwide to keep risk assets such as crypto firmly in check.
Back to the chart, BTC/USD has lost over $4,000, or 11.1%, in May already.
Historically, the worst month of May on record was, in fact, last year, in which the pair lost 35.3%, data from on-chain monitoring resource Coinglass shows.
After April’s performance, however, the odds of a comeback feel slim. For four years in a row prior to 2022, Bitcoin conversely saw gains of at least 32% in April, but this year printed a 17.3% loss — its worst on record.
As such, the advice from analysts when it comes to short-term Bitcoin price action is practically unanimous as the week begins: be careful.
After the weekly close, BTC/USD continued dropping down toward $30,000 at the time of writing, looking to test $33,000 and January’s lows of $31,800 next.
“Don’t try to catch this knife,” on-chain analytics resource Material Indicators told its Twitter followers alongside a chart showing bid support disappearing from the Binance order book.
The order book of May 8 shows a major bid wall in place at $33,000. It was put there as another wall of buy interest at around $33,800 was dealt with swiftly by the market, showing the veracity of sell-side pressure in the current environment.
“Historically $69.5M in BTC bid liquidity would serve as support, but historically it also had a significant amount of liquidity below it. That does not seem to be the case here,” Material Indicators added about that first line of defense.
Last week’s weekly candle also saw Bitcoin dive below its 100-week moving average (WMA) for the first time since March 2020.
Then, as with some previous piercings of the 100 WMA, BTC/USD then went on to test the 200 WMA as support. For popular Twitter account Bitcoin Back, the implications this time around are thus obvious.
“Both previous times led to capitulation to 200-week moving average in 2014 and 2018,” he wrote in part of his latest update.
“Today’s chart has many differences from those two times, and those two times were very similar to each other.”
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Blockchain Backer nonetheless added that he expected a “big dive in” on May 8 following the latest display of weakness.
As Cointelegraph recently reported, meanwhile, expectations even long before the weekly close were for Bitcoin to fall to or below $30,000 in the coming weeks. - Cointelegraph.
