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Shorting or buying Bitcoin (BTC)? A technical perspective..

March 25, 2021 16:01
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Many crypto beginners are worried after a 10% decline in the Bitcoin price over the last 24 hours and wonder if BTC will continue down. Here, Stanko goes through the last 6 months of Bitcoin trading and which levels that experienced traders look at right now.

It's no surprise that Bitcoin (BTC) could move significantly in the upcoming days, after all it's a highly volatile cryptocurrency. You need to consider that the price of has advanced from $28720 to above $51 284 since the beginning of January 2021, and many crypto analysts agree that there are plenty of reasons to be bearish on Bitcoin at the current price. But which technical analysis levels are there to watch out for? Continue below and discover where some extra caution or action might take place. Alternatively, look out for live cryptocurrency prices here at ShortSelling.com or select one of the top brokers for trading with crypto. The top list is custom made for over 50 countries, so you will see a relevant broker for your country when visiting our broker top list.

A fast price surge for Bitcoin in Q1, 2021
The price of most public cryptocurrencies has surged in a relatively short period, and some market observers have expressed concerns that the asset class may have entered a speculative bubble. Technically looking, Bitcoin is the main driver of the cryptocurrency market, and when the price of Bitcoin drops, that has a negative influence on all other cryptocurrencies. It is very hard to measure the real fundamental value of this cryptocurrency and predict where Bitcoin's price will go in the long-term, but according to some analysts, Bitcoin could crash again in the upcoming days or weeks.

I don't think that Bitcoin is widely used as a transaction mechanism. It is a highly speculative asset, and I think people should be aware it can be extremely volatile. I do worry about potential losses that investors can suffer,” said Janet Yellen, the US Treasury Secretary.

50 and 45k – The first levels to watch out for
After hitting record highs, weakness in cryptocurrency markets has been undeniable, and Bitcoin has encountered rather big intraday losses. The price has stabilized above $50 000, but a break below $45,000 support would indicate that Bitcoin could probably test the $40000 support. On the other side, some market experts expect to see new record highs for Bitcoin into the second half of 2021. The famous stock investor Bill Miller said that Bitcoin could reach new highs, but it is also important to mention that Tesla purchased Bitcoins for $1.5 billion recently, which made many small investors enter the space. Bitcoin is the first cryptocurrency to have existed and receive wide acceptance; it can be accessed by everyone and enjoys the support of both developers and users communities. Bitcoin still shows massive potential, especially if more companies decide to diversify some small portion of their cash balances in this cryptocurrency.

Technical analysis of Bitcoin with support & resistance levels
Bitcoin has weakened from its record highs, and the risk of further declines is not over yet. The price has stabilised above $51 000, but we can expect that the price could test a support level at $45000 again. According to technical analysis rules, a break below $45,000 would indicate that Bitcoin could probably test the $40000 support. One of the easiest ways to buy or short Bitcoin is through a margin trading platform. Many brokers allow this type of trading, with margin trades allowing investors to “borrow” money from a broker to make a trade. It's important to remember that there may be a leverage factor, which could either increase your profits or your losses. It's not a good idea to hold a short position for long periods or to leave an open position with no stop-loss order.

Bitcoin graph

The price of Bitcoin currently stands above $50k, and at this value, the total market cap of Bitcoin is around $880 billion. It is important to mention that Bitcoin has the most volume on the cryptocurrency market and the Bitcoin trading volume indicates how many Bitcoins are being bought and sold on specific exchanges. On this chart (the period from July 2020), I marked current support and resistance levels to help traders understand where the price could move. The more often price tests a level of resistance or support without breaking it, the stronger the resistance or support area is. When the price passes through the resistance, that resistance could potentially become support. Bitcoin remains in the “bullish phase, “and since the price advanced above $50000, the next resistance could be located around $53000. The current support level is $45000, and if the price breaks this level, it would be a “SELL” signal, and we have the open way to $40000. If the price drops below $40000, which represents very strong support, the next target could be located around $35000 or even $30000. In case you like to trade with high leverage, then Stormgain is the top broker for you.

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Conclusion
After hitting record highs, weakness in cryptocurrency markets has been undeniable, and Bitcoin has encountered losses of more than 25% in just one week. The price has stabilized now above $50k, but a break below $45,000 support would indicate that Bitcoin could probably test the $40000 support. The price of most public cryptocurrencies has surged in a relatively short period, and some market observers have expressed concerns that the asset class may have entered a speculative bubble. Technically looking, Bitcoin is the main driver of the cryptocurrency market, and when the price of Bitcoin drops, that has a negative influence on all other cryptocurrencies. Keen on buying or shorting Bitcoin? Try Stormgain, a flexible CFD-broker with decent leverage. Sign up for Stormgain here if you're from EU or Asia! Alternatively, explore eToro, the best broker for Americans with amazing support and copy trading features. Sign-up for eToro here!

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