What is the support level that might overturn Bitcoin short-term bearish situation?

Since the 20% drop on Monday Feb. 22, the price of Bitcoin (BTC) is ranging between $48,000 and $51,000, struggling to break out of the current resistance at $51,600. If this struggle continues in the near term, technical analysts predict a high probability of a correction.

The key level to watch is $51,600

Crypto trader and technical analyst, Josh Olszewicz, has named $51,600 as the current acting strong resistance level. He explained that Bitcoin needs to move past this price level for it to retest the all-time high of $58,000 and initiate a potential rally towards $62,000.

Therefore, a rally beyond $51,600 is the absolute nullification point for any short-term bearish scenario for Bitcoin. If the asset fails to break out of the level, there could be a bearish test of lower support areas which are around $42,000.

Olszewicz went ahead to say that if 4h breaks down, the market should be prepared for some uber bearish calls to start popping at 36.7k.

The $42,000 support level has been marked as important since it is the top of the previous rally, which happened on Jan. 8 on Binance, reaching $42,085 and causing a steep correction afterwards. However, a drop of BTC to $42,000 to retest the previous top as a support area would not automatically be bearish beyond the short term.

Whale groups indicate similar support levels

Analysts at Whalemap have noted large inflows of Bitcoin to whale wallets at $48,500 and $46,500 which they say should offer BTC with some support. They said that the current situation is similar to the one in January at $29K which held support during the then correction before the rally continued.

They also added that $55,400 was an important level to keep an eye on, as getting back above it would be a good sign for Bitcoin.

Arguments for a short-term Bitcoin drop

It is market knowledge that Bitcoin tends to seek liquidity after a prolonged consolidation. Therefore, it can drop to fill orders at lower support levels that can lead to a new rally.

Salsa Tekila, a pseudonymous trader, echoed this sentiment on Twitter, writing that there was a big support at $41,000 and resistance at $54,000 and depending on context, he might trigger swings around those two levels.

https://twitter.com/SalsaTekila/status/1364756344537047040

Although Bitcoin tested the $44,800 support level in the last 72 hours, it was not enough to propel it above $51,600. This trend could cause a drop back to the $44,800 support level or a lower one at $42,000.

Currently, the optimal situation is for BTC to hold onto the $44,800 support level if it drops below the current price above $50,000, making it a macro support level, and move back up.

Image by Gerd Altmann from Pixabay

Edwin Kinoti

Edwin Kinoti

Edwin is a naturally curious person with a deep interest in blockchain, finance and new tech, fields which he dedicates his time to researching and documenting.

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