Bitcoin Crash To $38,000: Here’s What Could Trigger It
Data reveals that Bitcoin’s latest downward spiral is putting it at risk of dropping even further. Analysts have identified key on-chain support levels that could trigger a crash to $38,000 for the cryptocurrency.
Bitcoin’s On-Chain Support Slips Below $41,200 To $42,400 Range
An analyst known as Ali explains that Bitcoin has breached an important on-chain support zone. This support zone refers to a price range below the current spot price of Bitcoin, which is significant for many investors.
For investors, the cost basis of their coins, which is essentially the price at which they bought their Bitcoin, holds great importance. A retest of this cost basis can impact their profit-loss balance.
According to investor psychology, if the retest occurs from above (indicating that the investor had previously made a profit), they may be inclined to buy more Bitcoin as they believe the same price range could yield profits again in the future.
On the other hand, if investors had previously incurred losses, they may be more likely to sell when the price reaches their break-even point. This is to avoid further losses in case the price drops again.
Although individual investors’ reactions may not directly affect the overall market, if a large number of them act in the same manner, it can lead to price fluctuations.
The chart provided in the article highlights the different price ranges for Bitcoin and the number of addresses that have bought at each level. The range between $41,200 and $42,400 appears to have significant investor interest, with 1.87 million addresses having purchased 727,520 BTC within this range.
Bitcoin has been testing this crucial support region, suggesting it may be weakening. If this range is lost, Bitcoin could see a further drop towards the next major support zone.
According to the chart, the $37,400 to $38,700 range is the next level with substantial on-chain support. Approximately 1.28 million addresses have their cost basis within this range, indicating potential buying pressure if Bitcoin reaches these levels.
Consequently, there is a risk that Bitcoin could decline to as low as $38,000 (the average price of this range) in the near future. If such a drawdown occurs, the current $41,200 to $42,400 range could turn into a resistance zone, as investors within this range would become loss holders eager to exit their positions.
BTC Price
Bitcoin briefly dipped to around $40,500 but has since recovered to the $41,600 range. This suggests that the support may not be completely lost just yet.