Bitcoin (BTC) Technical Analysis: Looking Bearish in the Short-Term but is $3,000 an Actual Threat?

Bitcoin is dancing on the $4,000 support again for the second time in three days, after a brief bull run to $4,370 yesterday failed to break the downtrending resistance line. Over 4hr candles, we can see that there is a great deal of uncertainty over Bitcoin’s short-term future at this particular psychological support, as a number of candles have closed near their opening prices. It appears likely that neither buyers nor sellers are sure whether Bitcoin will recover from this level or continue downtrending, so for now the asset is traveling sideways with little volatility.

In recent months, the $3,000 level has seemingly become the newly appointed ‘danger zone’ for Bitcoin, with many crypto proponents including Morgan Creek Capital Founder Anthony Pompliano, BitMEX CEO Arthur Hayes and Civic CEO Vinny Lingham all forecasting Bitcoin to hit this new bottom sometime in 2019. But how likely is this threat, and will the $3,000 level really spell doom for BTC if the asset does manage to fall on to it? Let’s take a look.

On the 4hr BTC/USD chart we can see that the asset had been tracking faithfully to three main trend lines (black); a clear downtrending resistance that has so far held down BTC on three separate occasions over the last 12 days, a middle level that has acted as both a support and resistance for the asset, and a lower support line that has caught the price action’s more recent lower lows. 

In the last 24hrs, however, both buying and selling pressure appears to have eased off, allowing candles to lift off the middle downtrending support and travel more sideways along the $4,000 level (blue dashed line). With the upper resistance still in play, BTC now appears to be tracking inside a bearish descending triangle pattern (red shaded area) as it starts to consolidate along a flat support with decreasingly lower highs. From this, we should expect BTC to break bearish through the $4,000 level in the short-term and seek new support further down around the $3,750 mark.

The 4hr MACD and RSI indicators both seem to complement this idea, with the MACD showing a clear bearish divergence between the 12 and 26 moving averages, and the RSI line starting to fall towards the oversold region as buying momentum declines.

On the 1D BTC/USD chart, there are two highlighted areas; the green area between the $4,400 and $3,600 levels, and the red area between the $3,600 and $3,000 levels.

The green area represents the current trading range for BTC in the short-term, with the $3,600 level representing the ‘turning point’ between here and the bearish range below.
The $4,400 mark has been a key resistance both recently and historically for BTC, and should candles start to close above this level, then this would likely be a good sign of a bullish reversal out of the current bear market.

The lower $3,600 support has also been a key level for Bitcoin, particularly during Q3 2017. This should pose as a strong support for bullish traders to push back from in the short-term if bearish pressure starts to increase again. However, if candles start to close beneath this key level and fall into the bearish region below, then it will likely give us our first confirmation that Bitcoin is headed towards $3,000.

Timing will be critical for BTC going into next year, because if the asset can hold inside the current range until Q1 2019 without falling below the $3,600 support, then hopefully the plethora of promising announcements that are due in Q1 next year (blue highlighted area) should help catalyse a bull market reversal and keep BTC out of that danger zone.

-The Bakkt Futures platform is scheduled to launch on January 24.

-The Nasdaq and VanEck Bitcoin 2.0 Futures product is expected to go live sometime in Q1 2019. 

-Fidelity has announced it will be launching its new Digital Asset trading platform in Q1 2019.

-The United States SEC is expected to deliver their final decision on the VanEck and SolidX Bitcoin ETF product on February 27, 2019.

If Bitcoin does collapse to $3,000 (-25.24% from current value) then we could expect increased FUD and media drama to assist in driving the price even further down until it reaches a point where bulls re-enter the market.

Summary of Key Levels

Short-term supports: $4,000 and $3,750.
Long-term supports: $3,600 and potentially $3,000

Main resistance: $4,400