Exclusive Bitcoin Drops Sharply after Tesla Suspends BTC Payments

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In Brief
  • Bitcoin is in the process of creating a bullish hammer.

  • BTC has support at $47,800.

  • It's facing resistance between $52,730 and $54,340.

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Bitcoin (BTC) decreased considerably on May 12. While it resumed its downward movement in the early hours of May 13, it has since bounced back above the $48,000 support area.

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The drop came shortly after Tesla announced that it had stopped accepting BTC as a payment option.

Significant BTC drop

BTC decreased considerably yesterday, falling from a high of $58,000 all the way to a low of $48,600. The decrease continued in the early hours of the morning until a low of $46,000 was reached. The $48,000 support area has been in place since the beginning of March 2021. 

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However, BTC has rebounded to a high of $51,247 and is in the process of creating a bullish hammer candlestick.

Despite the drop, technical indicators can still be considered bullish. Even though the RSI has crossed below 50, the MACD is still positive. If it were to cross into negative territory, it would be the first time it has done so since October 2020.

BTC Chart By TradingView

Ongoing Retracement

The six-hour chart already shows a bullish hammer in place. 

However, there is a very significant resistance area found between $52,730 and $54,340 this created by the 0.5-0.618 Fib retracement level. It’s also a horizontal resistance area.

Therefore, until BTC manages to break through the $52,730-$54,340 resistance zone, the trend cannot be considered bullish.

In addition, both the RSI and MACD are still falling, failing to provide any bullish reversal signs. 

BTC Chart By TradingView

BTC Wave Count

Yesterday’s drop invalidated the possibility that a bullish impulse began on April 25. Therefore, the most likely scenario suggests that this is a zig-zag correction in which BTC is currently in the C wave. 

A potential target for the bottom of the movement is found at $41,567. This aligns with the support line of a descending parallel channel. 

Following this, a move to the upside is expected.

BTC Chart By TradingView

In the longer term, this is presumably the A wave of either a long-term flat correction (red) or a fourth wave triangle (orange). 

At present, it cannot be determined which pattern will transpire. 

After the entire pattern is complete, another upward move towards a new all-time could still occur.

BTC Chart By TradingView

Conclusion

While another short-term drop could occur within the next few days, it’s not likely that this is the top of the greater upward movement for bitcoin.

For BeInCrypto’s previous bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Valdrin is a cryptocurrency enthusiast and financial trader. After obtaining a masters degree in Financial Markets at the Barcelona Graduate School of Economics he began working at the Ministry of Economic Development in his native country of Kosovo. In 2019, he decided to focus full-time on cryptocurrencies and trading.

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