Bitcoin Drops Down Nearly 50% from its Peak-Where is the Key Support Level?

The largest mainstream cryptocurrency Bitcoin continues another round of sell-off after a roller-coaster week trading. On Sunday, Bitcoin's biggest drop reached to 18% and fell to the lowest  $31,111. This price was almost half of the $64,854 Bitcoin hit its All-Time High (ATH) on April 14 this year.

Following a series of tweets last week by billionaire Tesla CEO and cryptocurrency supporter Elon Musk announced that Tesla would no longer accept Bitcoin as a payment method due to the environmental issue, BTC, therefore, was under the pressure of selling.

In addition, considering speculation and financial risks, three major regulatory bodies in China have prohibited banks and financial firms to provide cryptocurrency transaction services.

At the same time, China cracked down on the mining and trading of the largest cryptocurrency last Friday. Thus, Bitcoin once fell below the 40-week moving average support of around $36,572.

According to the data provider Glassnode, the Bitcoin Futures Open Interest under $11B for the first time since January.

At the time of writing, the bulls are actively holding the $35,000 support level. The BTC is trading at $36.414.

Bitcoin (BTC) price analysis

Source: BTC/USDT Daily via TradingView

The price of BTC is currently fluctuating, running along the lower trajectory of the Bollinger Band and still in a declining channel. On May 22, the price of BTC showed in a Doji candlestick pattern along with Sunday’s sharp drop, implying that the bears still dominates the whole market.

If the closing price on Monday cannot stand above the $35K psychological support level, it would trigger a panic in the market, leading to a greater correction for Bitcoin below $32,000.

Also, the currency pair may face strong selling intentions near the $37,000 area. However, passing through the $37,000 trend line resistance level can break through a boundary for a further rebound to the $40,000 level.

If the BTC needs to further rebound from the downward trend, the bulls must firmly push bitcoin above the 200-EMA of $41,838.

The Stochastic RSI recently is glued around the oversold zone of 20, indicating that bitcoin is still in the consolidation phase.

The market estimates BTC will likely trade sideways in the range of $30,000 to $40,000 for a period of time before it re-stands on 200-EMA of $41,838.