Bitcoin threatens $38,000 as 3-day chart hints at repeat of March 2020 Covid crash

Bitcoin threatens $38,000 as 3-day chart hints at repeat of March 2020 Covid crash

Bitcoin (BTC) tested $38,000 again overnight as the weekend began with uncertainty among traders.

BTC/USD 1 hour candle chart (Bitstamp). Source: Trading View

The 3-day chart could be a “precursor” for the weekly

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hovering around $39,000 after several attempts to break the $38,000 support.

The pair had also seen a brief surge above $40,000 on Friday thanks to geopolitical developments, which nevertheless lasted for a few minutes before the return to the previous status quo.

Such “fakeouts” at higher levels – which ended with Bitcoin coming full circle and liquidating short and long positions – were already familiar behavior for market participants this month.

Now, however, shorter timeframes were beginning to show signs that a larger downtrend might be on the horizon.

“BTC 3-day candles flirt with 200 MA for the first time since the Covid crash”, analytical resource Material Indicators warned Daily Twitter followers.

“If this is a precursor to what the weekly candle is going to do, make sure you have enough powder to take advantage of the buying opportunity that follows. This bounce can be life changing.

The 200-week moving average, currently just above $20,000 and still rising, has acted as a historic lower zone throughout Bitcoin’s lifetime and has never been breached.

BTC/USD 1 week candle chart (Bitstamp) with 200MA. Source: Trading View

Achieving this would require a 50% decline from the current spot price and 70% from all-time highs, which BTC/USD has nonetheless achieved in the past.

The Covid crash, for example, saw a 60% decline within days before an equally strong reversal sparked a new price paradigm later in the year.

Bitcoin remained at the mercy of equity markets over the week as they trended lower to cap weekly losses of 2.9% and 3.5% for the S&P 500 and Nasdaq, respectively.

Previously, popular trader Pentoshi made it clear that he believed a Wall Street Crash-like event could grip the markets this year.

Big and small BTC bets keep pouring in

On the positive side, whale redemptions and smaller portfolio growth for investors provided reason for joy for long-term hodlers.

Related: Bitcoin Derivatives Metrics Reflect Neutral Trader Sentiment, But Anything Can Happen

As Cointelegraph reported, 30,000 BTC left Coinbase on Friday, as FX reserves mimicked declines seen in July and September of last year – just before Bitcoin made significant price increases.

“10-100 BTC wallets stack like crazy, their supply becomes parabolic,” Lex Moskovski, CEO of Moskovski Capital, added on wallets, citing data from on-chain analytics firm Glassnode.

“These guys correctly sold the meat of the Bitcoin movement from $10,000 to $50,000.”

An attached chart showed that the proportion of BTC supply now held by entities – one or more wallets believed to have the same owner – was now at its highest level in a year.

Proportion of bitcoin supply held by entities with a balance of 10 to 100 BTC Annotated table. Source: Lex Moskovsky/Twitter