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Bitcoin has pulled out of a crucial area of support that served as the upper limit of the negative move near the 18,000 range in late June.
Bitcoin Breaks Crucial Level
After falling below the bear flag in mid-August, prices were able to fall further after a pause of 20,000 before reaching a crucial support area around 19,600. While it has just bounced back into action, since 2017 this level has also served as a critical source of resistance for the leading cryptocurrency.
BTC/USD falls below $20k. Source: TradingView
This puts strong downward pressure on Bitcoin as it moves in September. Moreover, according to cryptocurrency expert Ali MartinezBitcoin’s market share has fallen below 39% for the first time since 2018.
For Bitcoin maximalists, this is disturbing news as alternative cryptocurrencies continue to overtake the cryptocurrency monarch.
Popular cryptocurrency analysts have also drawn attention to a worrying trend in Bitcoin’s performance in September.
For example, according to an expert, Bitcoin has experienced a losing month end in nine of the past 12 September. On September 7, Glassnode reported that 19.29 million BTC addresses had losses.
When BTC/USD hit an all-time high of $19,666 on December 17, 2017, it reached its all-time high. Since then, a breach of this zone in December 2020 has sparked a rebound that has sent the major cryptocurrency soar before hitting a new all-time high of $69,000 in November last year.
Selling pressures have pushed prices below their late June low of $18,595, after falling below previous support that had turned into resistance.
Price may continue to crash
In the event that prices fall further, a psychological breakthrough of $18,000 could trigger a retest of the $17,792 level, representing the 78.6% retracement of the move from 2020 to 2021, with the low December 2020 of $17,569 as the next level of support.
The four-hour chart shows how these historic levels have created confluence zones that keep both bulls and bears at bay as the short-term price movement hovers between $18,500 and $19,000. Retests of $19,666 and the subsequent resistance low of $20,418 are likely on the upside as the price moves above $19,000 and $19,500.
In a recent report, the Glassnode also mentioned a possible negative market move of Bitcoin. It claimed that about 12.589 million BTC, or more than 65.77% of the total amount of BTC in circulation, has been inactive for at least a year.
In the past, “Bitcoin bear markets” were characterized by growing inactive supply. This magnifies the pain felt by maximalists who have patiently waited for a price breakout.
Short-term volatility was predicted by BaroVirtual, a CryptoQuant-based author. The analyst studied the trend pattern of Net Unrealized Earnings (NUP), which shows short-term periods of volatility.
Featured image from Shutterstock, charts from Glassnode and TradingView.com