Bitcoin prices fell nearly 30% on Wednesday, with BTC/USD touching off the 30,200 support level as markets tanked the heaviest in four years. The last time BTC/USD fell in such a magnitude was when China outlawed cryptocurrency trading in September 2017. Back then, Bitcoin prices halved, and the BTC/USD pair seemed down and out, only to soar 6-fold in three months.
It appears to be Deja Vu once more, as China’s prohibition of all cryptocurrency transactions by firms and banks on Tuesday seems to be the nail that closed the coffin on Bitcoin’s attempts to hold above $50,000. This has led to more than $8billion worth of liquidations as of the time of writing.
Bitcoin prices are now trading at $35,400 as of writing.
Technical Outlook for BTC/USD
Most did not see it coming, but the head and shoulders pattern on the daily chart was beckoning on all to see it.
The resolution of this pattern has occurred in a few minutes of heavy selling. Bitcoin prices slumped below the price projection of the measured move at 35297.47, locating support at 30208 before bouncing heavily. A retest of this price support requires the daily candle to break below 35297 with a convincing 3% downside closing penetration. Below that point, 27,500 and 25,000 may become likely resistance levels.
On the other hand, an extension of the bounce targets 37455. A break of this level allows for a continued recovery towards 41000 and possibly 43569, in that order.