Fed FOMC comments and Bitcoin ‘bear channel’ could trigger a drop to $28,000

In early May, weakness in the crypto and stock markets has continued, and at the moment there are no signs of short-term factors that could reverse the bearish trend.

The stock markets are also in a downtrend according to According to researcher Clara Medalie, the price of shares in Bitcoin (BTC)-exposed companies has also taken a notable plunge.

Bitcoin vs. BTC exposed companies. Source: Twitter

medal said:

“Block, Tesla, Microstrategy and Coinbase are down between 20% and 50%.”

Data from Cointelegraph Markets Pro and TradingView shows that an early morning attempt by Bitcoin (BTC) bulls to rally above $39,000 was easily defended by bears, resulting in a pullback to the $38,200 level.

BTC/USDT 1-day chart. Source: TradingView

Here’s what multiple analysts are saying about the current price action, and what lower levels to watch in case of another pullback.

More down moves until the 200 EMA turns support

According to independent market analyst Rekt Capital, Watch after for a close above the 200-day exponential moving average (EMA) is an easy way to gauge Bitcoin’s current weakness. The analyst described the metric as an “indicator of long-term investor sentiment towards Bitcoin.”

BTC/USD 1 day chart. Source: Twitter

Rekt Capital said:

“Since mid-2021, BTC has not been able to stay above the black 200-day EMA for too long. Any time BTC would break above the EMA, it would quickly lose it as support and rebound lower.”

$28,000 could be the macro bottom

A glimpse of what could be next for BTC price was brought up by crypto trader and pseudonymous Twitter user “Cantering Clark,” who posted the chart below showing the similarities between current price action and BTC’s price action in July 2021.

BTC/USD 1 day chart. Source: Twitter

Cantering Clark said:

“A similar pattern of strong sell-offs followed by weak attempts to shoot higher as we saw in July 2021, again after a longer-term sideways range took shape and lows began to be favored. Possible trap setup.”

Old dealer Peter Brandt too divided shares similar sentiment, noting that if the current “bear channel” prevails, bitcoin price could drop to new lows.

BTC/USDT 1-day chart. Source: Twitter

Brandt said:

“The completion of a bear channel usually results in a pullback equal to the width of the channel or in this case a severe test of around $32,000 – $28,000 I’m guessing.”

Related: Bitcoin ‘bear market’ could send BTC price to $25,000, says trader whose shares are capitulating

Long-term accumulation continues

Despite the current downtrend, data from glassnode suggests BTC accumulation continues to increase, a fact highlighted by Twitter account Negentropic.

Change in the net position of the long-term holder of bitcoin. Source: Twitter

The analysts said:

“Panic short-term holders realized losses while long-term holders’ net change in position increased.”

The total cryptocurrency market cap is now $1.72 trillion and Bitcoin’s dominance rate is 42.5%.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.