bitcoin seemed to have been safely floating above support just before, but today, the picture has changed as the price suddenly plummeted to $42,500.
bitcoin has plummeted more than 6% over the last 24 hours
bitcoin had started the year 2024 with strong bullish momentum as the market had been looking at potential ETF approvals with hopeful eyes. The asset had only been at the $45,000 level not seen since April 2022 for just a couple of days before the price suddenly crashed.
The chart below shows the performance of cryptocurrencies over the past few days.
<img decoding="async" class="alignnone size-medium aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-Sinks-Below-Support-as-Price-Falls-to-42500" alt="bitcoin price chart” width=”1534″ height=”868″ loading=”lazy”/>
Looks like the coin's price has plummeted during the last 24 hours | Source: BTCUSD on TradingView
During this drop, bitcoin had briefly reached a low of $41,500, but the cryptocurrency has since seen a small rally as its price is now trading around the $42,500 level.
As is often the case, the rest of the sector has also plummeted along with the original digital asset, with most coins recording drops of even greater degrees.
Just before this drop, bitcoin had been floating above a critical support line and looked set to continue its recent bullish momentum.
bitcoin had broken out of an ascending triangle pattern with a recent rally
in a mail On X before the crash, analyst Ali had discussed where bitcoin price could be headed after its break above the $45,000 level based on technical analysis data. Below is the chart that the analyst shared in the post.
<img loading="lazy" decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-Sinks-Below-Support-as-Price-Falls-to-42500.jpeg" alt="bitcoin Pattern” width=”2233″ height=”1452″/>
The pattern that had formed in the 4-hour price of the cryptocurrency | Source: @ali_charts on X
On the chart, Ali highlighted an Ascending Triangle pattern that bitcoin seemed to have successfully surpassed with the rising price. An “Ascending Triangle” refers to a continuation pattern of two trend lines that form a triangular shape.
One of the trend lines is a horizontal level formed by connecting highs of the asset, while the other is a diagonal line connecting higher lows. The pattern is “ascending”, as its name says, as the general consolidation between these two trend lines narrows towards the upside.
Generally, when the price retests the horizontal level, it is likely to feel some resistance and form a local top. If the resistance is broken, it could be a sign that the asset would now show continued upward momentum.
Similarly, the diagonal line is usually a support point for the asset, and one should be wary of sustained breakouts below as they may indicate that a downtrend is taking control.
From the chart, you can see that bitcoin had gained some distance above the previous triangle and seemed to be finding support at the 0.786 Fibonacci ratio, which sits at around $44,900 for the asset.
Ali had noted that if sustained buying continued at this support, bitcoin could advance towards the $49,000 level. But it turned out that the market had other plans for the cryptocurrency, as its price has plummeted well below this support level.
Featured image by Kanchanara on Unsplash.com, charts by TradingView.com
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