Bitcoin on the Brink After Market Bloodbath: Collapse Continues or Rally Ahead?

A dreadful day for the S&P 500 (down 4.36%) and the Nasdaq (down 6.36%) impacted on the Bitcoin price and forced it all the way down to the very brink of its own potential collapse. Currently sitting just above last ditch horizontal support at $75,000, is the $BTC price about to go over the edge and down below $70K, or is a saving rally about to take place?

S&P Futures predicts stock market bounce?

Source: TradingView

A good chart to go to in order to have an idea how the U.S. stock market might open on Friday is the S&P 500 E-mini Futures. In this chart we can see the towering red candle of Thursday’s stock market collapse which fell through the support trendline like a stone. 

That said, the Futures came down to 7,323 points, precisely matching the previous low. As can be seen, the Futures have bounced quite strongly from here. While it is still a few hours from the open, this could be an indication that there will be a stock market recovery bounce which could take the S&P 500 all the way back to the ascending trendline at around 7,550 points – one that could help to push the $BTC price up and away from its own potential point of collapse.

Major $75K support about to break?

Source: TradingView

After a super rally on Wednesday, Thursday’s crash must have been hard to bear for the bulls. This fifth wave down from the top has much in common with the previous ones. With the exception of the very first wave down, the next four have all started with red enveloping candles. Did the $BTC price just find the bottom, or is another period of consolidation to be followed by a sixth red candle that breaks the channel bottom and heads back down to the bull market support trendline at around $66K?

A collapse to $66?

Source: TradingView

While things can look quite bleak for the $BTC price in these current times, by zooming out into the macro time frame of the weekly we can observe the ebb and flow of the bear and bull markets. The 50-week SMA has played an important role in the last two bull markets, providing support all the way through each. Once the 50-week SMA turns to the upside, that is pretty much the indication that the bull market is alive and well. We are nearing that time.

Let us presume that the 50-week SMA support does not hold, perhaps because we are still very early in the bull market. The ensuing collapse would probably take the $BTC price down to $69K, which is the top of the 2021 bull market. Just below this is major support at $65,750, which is the level of the candle body tops in 2021, huge support and resistance during the 8-month bull flag of 2024, and support and resistance for the price action at the bottom of the recent bear market, and of course, this would also line up with the bull market trendline.

We don’t know what the markets have in store for us. If the U.S. stock market keeps falling precipitously, Bitcoin could end up breaking down below huge price structures built up over years. Is this going to happen? Only time will tell.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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