Bitcoin (BTC) crashed below $50,000 after the Bank of Japan announced that it was raising its interest rate from 0% to 0.25%.
This decision directly impacted the US stock market, as traders were borrowing Japanese Yen at low interest rates to buy assets in the US market. A shift in this paradigm has directly impacted risk assets, with BTC experiencing further corrections.
Bitcoin price repeats “lower high” trend from Q2
Bitcoin witnessed a third lower high (LH3) on July 29, when it briefly touched $70,000. This particular pattern has signaled a strong bearish reversal each time in 2024, with BTC currently down 25% since LH3.
Previously, the lower highs observed in April and June 2024 led to significant corrections of 23% and 26%, respectively.
Where is Bitcoin’s next key support level?
Bitcoin’s flash crash caught everyone off-guard. The BTC price pair wasn’t able to hold its previous support levels at $60,000 and $57,000, eventually dropping below $50,000.
As BTC’s market structure forms a new lower-low pattern, Axel Adler Jr, CryptoQuant contributing analyst, explained that BTC price has recorded a fifth instance where “the price has fallen below the moderate risk lower boundary of 9% from the average purchase price of active investors.”
“The support level for this cohort is $48K.”
Additionally, Charles Edwards, founder of the Capriole Fund, believes that BTC should start retracing at its current range of around $52,000. However, if BTC fails to hold above $50,000, its next key support lies around $44,000, he says.
The low $40K-levels served as the consolidation range from December 2023 to February 2024.
6.39M addresses defending BTC at $42K
While popular proponents implied that BTC should bounce at $48,000 or $44,000, Intotheblock data indicates that the big holders’ cohort remains further down.
Around 6.39 million addresses currently hold 2.38 million BTC at an average price of $42,446. A retest of $42,466 will mean another 18% correction from its current market value. This can certainly create further panic and drastically impact buyer confidence.
Related: Bitcoin ‘late longs’ washed out as BTC price falls to 65k
From a technical perspective, a bidding range between $44,000 and $48,000 makes sense as there is a weekly order block formation in this range, which confluences with two other indicators.
Thus, BTC’s price has a good chance of retesting the weekly 100-exponential moving average (100-EMA) at this range — and the 0.5 Fibonacci line is around the same level at $44,672.
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