Bitcoin Price Approaches Key Support Levels That Could Prevent A Big Drop

Bitcoin Price Approaches Key Support Levels That Could Prevent A Big Drop

Bitcoin (BTC) clung to $29,000 at the open on Wall Street on May 27 as crucial support levels were hundreds of dollars away from the spot price.

BTC/USD 1-day candlestick chart (Bitstamp). Source: TradingView

Traders demand a higher low above $28,000

Data from Cointelegraph Markets Pro and TradingView confirmed that volatility returned in a week of frustrating price action.

The BTC/USD pair found itself in a tight range throughout the day, and for Cointelegraph contributor Michaël van de Poppe, it would not take much deviation to upset the status quo.

“Technically speaking, when it comes to Bitcoin, you clearly want to see a higher bottom happening here, and if that happens, we may start to see the continuation,” he said in his most recent YouTube update.

Levels to hold were now close at $28,600 and $28,200 to avoid going back to the weekly low of $28,000 and risk giving up the chance of a higher low build.

“If that level is lost, then I am going to expect us to get closer to $26,000, as then we are going to start cascading south even more,” he concluded.

Commentator Bob Loukas was also cautious as he watched the Bollinger Bands volatility indicator throughout the day to warn of the possibility of another drop.

In social networks, the feeling prevailed that was coming a capitulation movement for the cryptocurrency, something that has characterized the position of the market in recent weeks.

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Supply in profit zone favors bears

Meanwhile, analysis of the broader network fueled concerns that current prices might not last long.

Assessing the percentage of supply in profit, Kripto Mevsimi, a contributing analyst at on-chain analytics platform CryptoQuant, drew bearish conclusions.

Currently about 55% of the supply was in profit, he explained, and compared to historical behavior, more price capitulation would need to come in to provide some collateral from a macro fund.

However, we should first see a period of sideways movement for the BTC/USD pair culminating in a drop. This would make the current price action coincide with the 2018 bear market and the March 2020 crash in the wake of the COVID-19 pandemic.

“Then; 2-3 months of boring price action. Then the last possible capitulation with an additional 30%-50% drop in price,” he summarized.

An attached chart compares the three phases starting with the 2017 high of $20,000.

Bitcoin Price Approaches Key Support Levels That Could Prevent A Big Drop
Graph in which you can see the supply of Bitcoin in profit compared to the behavior of the BTC/USD pair. Source: CryptoQuant

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