Bitcoin Price Caught Between Key Support Levels as Bearish Sentiment Grows

Bitcoin (BTC) price had a relatively muted day as the digital asset traded between $8,700-$8,885. 

Currently, the price remains below the ascending channel trendline and the daily candle closed as a neutral doji, showing bulls and bears are in contention on the direction Bitcoin will take over the short-term. 

Crypto market weekly price chart. Source: Coin360

As the price searches for direction and its dominance rate drops from 67% to 65.5%, a handful of altcoins continued a multi-day streak of impressive double digit rallies. 

Despite Bitcoin price finding difficulty in reclaiming $9,000 and re-entering the ascending channel  Cointelegraph reported that the majority of top traders at Binance remain long on the top ranked digital asset on CoinMarketCap and a number of large cap altcoins.

Investor sentiment takes a knock

Interestingly, data from TheTIE, a crypto-oriented alternative data provider, shows that investors are growing increasingly bearish about the short-term price prospect of Bitcoin price. 

Daily Sentiment Score vs Price (BTC). Source: TheTie

As shown by the chart above, over the past week Bitcoin’s price drop corresponds with a drop in sentiment. TheTIE defines the daily sentiment score as “a measure of how positive or negative conversations on Twitter have been about a particular coin over the last 24 hours vs the previous 20 days. A score below 50 implied that conversations are becoming more negatives.” 

Previous analysis by Cointelegraph has uncovered the relationship between tweet volume, Bitcoin mentions, trading volumes and spot prices so keeping a gauge on crypto-related social activity is a practice many crypto investors find useful. 

Crypto Fear & Greed Index. Source: Alternative.me

The Crypto Fear & Greed Index, another popular Bitcoin sentiment metric traders typically counter trade, also shows a sharp decrease in bullish investor sentiment. Currently the indicator reads ‘Fear’ and is at 39, a sharp drop from last week’s ‘Neutral’ reading of 50. 

Last week as Bitcoin price repeatedly bounced off the ascending channel trendline investors felt some reassurance in the digital asset securing a close above $9,300 as the channel had provided strong support for more than two months. But, once the price closed last week below the channel bullish sentiment dropped. 

A close above the 20-MA is needed

Despite remaining below the ascending channel and $9,000, Bitcoin price is beginning to notch daily higher lows and the MACD histogram hints at a decrease in bearish momentum. 

Even though reclaiming the $9K handle would be a positive development, the price now trades below the long-term descending trendline from the 2020 high at $10,500. A more encouraging sign would be for the price to close above the 20-day moving average at $9,240. 

BTC USDT daily chart. Source: TradingView

For the past few days $9,000 and $9,100 have been resistance levels the price struggles to overcome and the price has been pinned below the 20-MA since dropping from $9,800 on May 20. 

Currently the price is working its way back toward $8,900 and a push above $8,950 would open the door for a quick move to $9,100 but resistance at this level and $9,200 could lead to a quick rejection. 

A number of traders are also viewing $9,300 as a possible resistance level to open shorts, therefore, as an entry at the current price doesn’t appear to offer an attractive reward for the risk. 

BTC USDT 1-hour chart. Source: TradingView

There’s also a head and shoulders pattern on the 1-hour timeframe, meaning repeat rejections at $8,880 could lead to the completion of the right shoulder and cause the price to drop below support at $8,700.

As mentioned earlier, Bitcoin price is now painting higher lows on the daily-4-hour chart and buyers have bought the recent dips to $8,700. For the short-term traders can watch for a 4-hour close above $9,000 and $9,100 to see if the price can hold above either level. 

In the event that Bitcoin drops below $8,700, the volume profile visible range shows $8,550 as the last level of support before the price could drop to the $7,700-$7,450 range. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.