It has been a wild couple of weeks in crypto, leading up to Wednesday’s frantic action.
Bitcoin has been weak for a while now, but all week it’s been struggling as China toughens its stance against the digital currency.
Although he did tweet the equivalent of “Tesla has diamond hands” earlier on Wednesday, indicating the company would be holding onto the digital currency.
At one point Wednesday, Bitcoin was down 29.3%.. Assuming it does in fact close lower on the day - after all, it’s still down more than 13% - it will mark the cryptocurrency’s fifth straight daily decline.
I don't think that it’s lost on anybody that Bitcoin peaked on the same day that Coinbase (COIN) - Get Coinbase Global Inc Report went public. A new convertible note offering from Coinbase isn't isn't helping that stock either.
With a big bounce underway and with Bitcoin suffering a peak-to-trough decline of roughly 53%, what do the charts look like now?
You can see the recent volatility on the weekly chart above. We have been pretty consistent at pointing out resistance between $58,000 and $60,000, but this chart really highlights that observation.
With such a violent dip being met with a robust bounce off the lows, investors are kind of stuck in a strange spot.
Obviously, the tone has changed on Bitcoin as sellers have harnessed control. From here, there’s a roadmap to navigate though.
A move back below the 10-month moving average could put Wednesday's low in play near $30,000. The latter area was support as it buoyed Bitcoin earlier in the year before it ripped toward $60,000.
On a break of the 50-week moving average, it could open the door to a retest of the $20,000 area - a major breakout zone and near the prior all-time highs - as well as a test of the 21-month moving average.
On the upside, keep an eye on the 200-day moving average, currently near $40,000.
Back above that mark and bulls may feel emboldened. Back above $40,000 could put last week’s low in play near $43,000, followed by a test of the 10-week and 21-week moving averages.
It’s hard to map out too far in the future with a volatile asset like Bitcoin. It could rally to or through one of these levels, fail and reset several times. Just go one level at a time and see how it reacts to key measures.