- Bitcoin has been in a short-term downtrend.
- The cryptocurrency is currently correcting lower after forming a double-top pattern.
- Key support levels at $63,000 to $65,000 are crucial for traders to watch.
- Unlock AI-powered Stock Picks for Under $8/Month: Summer Sale Starts Now!
Bitcoin experienced a volatile week, with an initial surge driven by positive statements from US presidential candidate Donald Trump followed by a sharp decline to key support levels as the crypto formed a double-top pattern on the daily chart.
Trump's pro-Bitcoin stance ignited a rally, pushing Bitcoin towards the $70,000 level. However, a subsequent $2 billion Bitcoin transfer by the US government, potentially in response to Trump's comments, triggered a sell-off.
The broader market also influenced the price action. While the Federal Reserve's dovish tone initially supported risk assets, concerns about a potential economic slowdown resurfaced after key data came out, leading to a decline in US equities.
This weakness spilled over into the cryptocurrency market.
Despite the recent pullback, the $63,000 to $65,000 price range remains a key support level for Bitcoin. Traders should closely monitor this area for potential buying opportunities as the cryptocurrency market navigates through this period of heightened volatility.
Bitcoin Faces Crucial Test: $63,000 Support Holds the Key
In the last two weeks, Bitcoin struggled to break through the Fib 0.786 level at $68,200, encountering strong resistance. This created a double-top pattern in the short term. The boundary line of this pattern aligns with Fib 0.618, based on Fibonacci retracement from the June decline.
This week's downtrend saw Bitcoin pull back from this boundary, rebounding quickly from the $62,300 region due to rapid buying. While the downward trend persists, the double-top pattern seems complete. Bitcoin may test levels below $63,000 in the coming days. Maintaining daily closes above $63,000 is crucial to prevent a sharper decline.
If Bitcoin fails to hold this level, it could drop to the $60,000-$61,000 range. Conversely, strong demand during weekend trading could drive Bitcoin back toward the $68,200 resistance. A breakout there might push the price to the critical $71,000 mark, setting the stage for a potential new record.
On the weekly chart, Bitcoin's pullback hasn't disrupted the medium-term bullish outlook. The cryptocurrency remains in an upward channel, trading above its short-term EMAs. However, the weekly Stochastic RSI is bullish despite the falling price.
To summarize, for Bitcoin to avoid further decline, it must break out of the demand zone at $63,000 with strong buying volume. Failing this, a retreat to around $60,000 is likely before any potential recovery.
Meanwhile, Ethereum Continues to Test Key Support
Following the approval of spot ETFs, Ethereum saw heavy selling as initial excitement faded. Spot ETF trading will be monitored in the coming period.
Grayscale’s conversion of its old product into an ETF has led to continued exits, which are also impacting Ether ETFs. This situation mirrors the early days of Bitcoin ETFs.
After rallying towards $3,500 in early July, Ethereum hit resistance at the Fib 0.618 level from the June decline. Since July 20, Ethereum has been retesting the falling trendline amid its pullback.
Currently, Ethereum has strong support at $3,100. If this support fails, ETH could quickly drop to around $2,800. However, managing the selling pressure above $3,100 could lead to daily closes above $3,270, signaling a recovery.
Technically, after making a move towards $3,500 in the first half of July, ETH encountered resistance at Fib 0.618 relative to the June decline. After July 20, we saw the cryptocurrency begin to retest the falling trendline in the pullback that started.
Currently, Ethereum is firmly supported at $3,100. If this support is lost, we can see that ETH can quickly retreat towards the $ 2,800 region.
At the moment, the range of $3,270 - $3,350 seems to be a critical resistance zone. After breaking out of this area, we may see a trend towards $3,700 - $3,800 in the short term with new buyers stepping in.
***
This summer, get exclusive discounts on our subscriptions, including annual plans for less than $8 a month!
Tired of watching the big players rake in profits while you're left on the sidelines?
InvestingPro's revolutionary AI tool, ProPicks, puts the power of Wall Street's secret weapon - AI-powered stock selection - at YOUR fingertips!
Don't miss this limited-time offer.
Subscribe to InvestingPro today and take your investing game to the next level!
Disclaimer:This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.