Bitcoin (BTC) is retesting a key support area after the price fell 5% from recent highs and fell below the $90,000 barrier. Some analysts suggest that the cryptocurrency's structure remains intact, but warn that if it does not rebound soon, it risks retesting November's lows.
Bitcoin retests $88,000 after rejection
On Friday, Bitcoin lost its recently regained $90,000 level and fell to a major support area before stabilizing. The flagship cryptocurrency is attempting to recover from a market correction in November that saw its price drop to a seven-month low of $80,600.
Since hitting local lows two weeks ago, the cryptocurrency has been trading within a macro-re-accumulation range of $82,000 to $93,500, and is on the verge of breaking out of this zone, reaching a multi-week high of $94,150 on Wednesday.
However, as the first week of December drew to a close, BTC once again lost the upper bound of the local range, falling below the monthly opening price and reaching support at $88,000.
Amid the selloff, analyst Ted Pillows noted that Bitcoin is struggling to regain resistance at $94,000, adding that the price “hopes to drop further here before attempting another breakout.” Therefore, a rebound from the $88,000 to $89,000 support zone is likely, he suggested.
Altcoin Sherpa asserted that the ongoing retest will confirm whether the recent rally is “simply cutting off the highs and driving the price down, or if there is actually room for a rebound to around 100,000.”
Analysts outlined two potential outcomes. In the first scenario, the flagship cryptocurrency will return to the $87,000-$89,000 area and rebound above the $93,000-$94,000 resistance level.
In the second scenario, Bitcoin could continue to trend sideways below local resistance and eventually fall to November lows or even lower levels. Analysis shows that major cryptocurrencies need to bottom out soon or risk a second outcome.
BTC shows a shallow downward trend
Analyst Recto Capital also noted that Bitcoin continues to face rejection from higher resistance levels in the range. But he doesn't think investors need to worry unless the rebound is as big as in the past.
“If the rejection is shallower than the previous two, this resistance will continue to weaken until it is finally broken,” he explained, adding, “As long as this weakening continues, BTC should be able to eventually break through this resistance over time and challenge the multi-week downtrend mentioned above.”
Earlier this week, the same analyst asserted that BTC's consolidation structure will remain intact as long as Bitcoin closes the week above the range lows. He also noted that the macro downtrend, which has “defined resistance throughout this stage of the cycle,” remains a key structural barrier and a level to be broken.
With prices holding steady in the $88,500 to $89,350 range, the analyst added that the range's “'shallow retrace' trend” remains intact as today's retracement “continues to be a shallower decline than the previous two.”
He noted that Bitcoin could technically fall to the rising two-week support trend line or even reach the $86,000 level, resulting in a shallower correction than the recent 10% decline.
At the time of writing, Bitcoin is trading at $89,400, down 2.9% on a daily basis.
Featured image from Unsplash.com, chart from TradingView.com
