Bitcoin broke through the support of $ 40 thousand. Is everything lost?

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Cryptocurrency market participants are panicking more and more as Bitcoin hit a low yesterday again, dropping below $ 40,000 for the first time since September 2021. Is it really that bad? Let’s figure it out.

Michael van de Poppe is waiting for growth

Let’s start with the popular trader Michaël van de Poppe, who has received a colossal audience of 555.8 thousand followers on Twitter. He rightly wrote today that when Bitcoin was worth $ 65,000, people wanted to buy it cheaper. Now that the price has dropped by 40%, people want to buy even cheaper – for $ 30 thousand.But if Bitcoin costs $ 30 thousand, people will still wait for it at a price of $ 20 thousand.

Van de Poppe would not be so popular if he limited himself to words. Of course, he shared the schedule (see, for example, the last video review). Actually, from his point of view, the breakdown of $ 40 thousand changed nothing. We are still above critical support (green on the chart) and below critical resistance (red rectangle).

Van de Poppe set the task for bitcoin to break through the important level of $ 42.8 thousand in the near future.

Bitcoins are sold at a loss – CryptoQuant

CryptoQuant analysts could not stand aside and shared the actual data of the SOPR indicator (Spent Output Profit Ratio).

On March 1st last year, I said that SOPR (Profit Ratio) tracks the profit made when selling bitcoins. When the indicator is greater than 1 and falls, sellers take profit. A decrease in the indicator to 1 (a complete reboot of the SOPR) means that sellers have already sold everything they could, and an opportunity opens up for new growth in bitcoin. Readings below this level indicate that investors are selling at a loss. In this case, the market enters a bearish phase.

At that moment, Bitcoin drew a beautiful triple bottom on the 4-hour clock, and the SOPR rebooted (‘buy the dip’ signal). This bullish forecast has fully justified itself (from March 5 to March 13, Bitcoin rose 33%).

But back to the current days.

CryptoQuant points out that the SOPR is now below 1. This means that bitcoins are being sold at a loss. There was a similar period from May to July 2021 (as a reminder, Bitcoin’s bull rally resumed on July 20).

There will be a short squeeze – Glassnode

Glassnode released a weekly review in which it expressed the opinion that short squeezes are ripe in the bitcoin market, that is, a sharp rise, the rocket of which is refueled by liquidating short positions. Analysts note that long positions have suffered constantly since the November high of $ 69K, and now, when no one expects it, they should be in luck.

Let me remind you that a few days ago, the CryptoQuant resource also talked about the high probability of a short squeeze due to the congestion of the Bitfinex exchange with short positions.

What’s in the bottom line

Of course, not everything is so rosy. The lower bitcoin falls, the more analysts appear predicting a further fall (here a direct analogy with the behavior of people described by Van de Poppe at the beginning of the review). And there are reasons for this.

For example, bitcoin has consolidated below its 50-week moving average, which effectively means that the current bitcoin rate is below its annual average price. This is a bad predictive sign indicating a bearish phase in the market.

But no market can not only grow endlessly, but also fall endlessly. There is every reason to predict a rebound. At least in order to test the 50-week moving average at the level of $ 48 thousand from below. And then we will see.

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