Bitcoin Suffers Largest Weekly Decline Since November 2022

Key Takeaways

• Bitcoin selling continued over the weekend, with the cryptocurrency plummeting nearly 15% over the last week, its largest seven-day decline since the collapse of bankrupt crypto exchange FTX in November 2022. The sharp downturn carried over into Monday's Asian session, taking bitcoin to its lowest level since February.

• Bitcoin liquidations have tallied nearly $200 million over the past two days, their highest level since early July.

• The cryptocurrency's price has broken down from a wedge pattern early in Monday's Asian trading session, indicating lower prices.

• Bitcoin's price will likely gain interest at key chart levels including $56,000, $47,000, $40,000 and $35,000.

Bitcoin (BTC) selling continued over the weekend, with the cryptocurrency plummeting nearly 15% over the last week, its largest seven-day decline since the collapse of bankrupt crypto exchange FTX in November 2022. The sharp downturn carried over into Monday's Asian session, taking bitcoin to its lowest level since February.

The digital asset has come under pressure over the last week as investors abandon risk-on bets amid escalating tensions in the Middle East and employment data indicating that the U.S economy may be slowing more than previously thought.

On the trading front, crypto analytics site Coinglass showed Bitcoin liquidations for long positions tallying nearly $200 million over the past two days, their highest level since early July, adding further downward pressure as brokers forcibly close over-leveraged trades arising from recent price fluctuations.

Below, we take a closer look the legacy cryptocurrency’s chart and use technical analysis to identify key price levels that may come into play amid ongoing selling.

Breakdown From Wedge Pattern

Since topping out in mid-March, the pioneer cryptocurrency has oscillated within a wedge-like pattern, a chart formation that consists of two converging trendlines connecting a series of respective lower highs and higher lows. Typically, a wedge represents consolidation in an asset’s price before a trending move in the direction of an eventual breakout.

Indeed, the price has broken below the pattern's lower trendline early in Monday's Asian session, a move that could lead to further falls in the week ahead. Moreover, the 50-day moving average sits poised to cross below the 200-day moving average to form an ominous death cross, a signal that predicts lower prices.

Monitor These Key Chart Levels Amid Further Selling

Amid further selling in Bitcoin, investors should monitor four areas on the chart likely to remain in focus.

Firstly, it’s worth watching if bulls can defend the wedge pattern’s lower trendline, which currently sits around $56,000. An intraday reversal to reclaim this level on Monday could suggest a possible bear trap.

However, a decisive volume-backed breakdown below the pattern could see a fall to $47,000, a location on chart where the price could encounter support near the January peak that formed as part of Bitcoin's trending move between September 2023 and March this year.

Ongoing selling could see the price revisit $40,000, a location where buyers may seek entry points near the prominent January swing low.

Finally, a larger sell-off could trigger a drop to $35,000, where the cryptocurrency would likely find support from a period of price consolidation between late October and mid-November last year, shortly after the price climbed back above the 200-day MA.

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