Bitcoin price is performing in a way that makes us miss its annoying horizontal days. The price fell below $27,000. Even though the data today was positive, Bitcoin sellers chose to paint the market red. Altcoins fell to important support levels. So what will happen next? How should we interpret the recent drop?
Bitcoin (BTC)
US CPI data for April showed that inflation rates continued to fall. Markets had expected annual inflation rates to remain at 5%, but data released on Wednesday showed that the CPI rose by 4.9%, the smallest increase since April 2021. The reaction in the crypto world was initially positive. The Bitcoin price rose above $27,800.
However, the price, which rose as high as $28,300, could not find further support. So what will happen next? Will the decline continue?
The four-hour Bitcoin chart below points to strong support in the $26,800 to $27,200 area. This was also a 4-hour bullish order block from late March. While this set the stage for a bigger rally, the inability of buyers to defend the $27,800 level as support caused concern among bulls. Naturally, panic selling by short-term traders worried about further losses drove the price down to the support area.
What About Cryptocurrencies?
Bitcoin price is set to close the second 4-hour candle below $27,200 at the time of writing. If the 23:00 candle also closes below this area, the next critical level of 26,800 will become even more important. As such, it might be wise to wait for price action to develop. Bitcoin is expected to break out at either the $28,200 or $27,200 levels. For now, there is a strong possibility that the bearish outlook will solidify after the last 4 hours of closure.
The 1-hour chart from Coinalyze shows that Open Interest has risen in the last 12 hours. This supported the bearish trend. On top of that, spot CVD has been in a downtrend throughout May. If the Bitcoin price stays below 27,200 for the next 2 days, altcoin traders may suffer further losses.
Short-term Bitcoin traders are also likely to retreat to the attractive $25,000 price zone after selling off in May. Of course, this scenario suggests that altcoins could also lose their current critical support levels.
