Bitcoin (BTC) Price Analysis: Critical Support Breakdown Signals Potential Market Correction

Bitcoin (BTC) recently plummeted to $54,179 on July 5, the first time the asset has traded at this price since February. This sharp decline has prompted fears of a deeper market downturn among analysts and investors.

Bitcoin (BTC) price has seen a sharp decline of over 20% since hitting a local high of $69,000 on April 10. This rapid decline has raised concerns among traders and investors regarding the sustainability of the bull market.

However, a closer examination of the BTC price action reveals a critical technical breakdown that could provide valuable insights into the broader market trend.

Critical technical breakdown on daily time frame

Trading expert Alan Santana recently highlighted a critical technical breakdown on the daily time frame. Bitcoin’s long-term exponential moving average (EMA) support, which has been a key technical level since May 2024, has been breached following several tests.

This EMA, which currently lies around $57,500, has served as a significant support level throughout 2024, helping to arrest the بازار ارز دیجیتال's decline from highs above $60,000.

However, during the recent market downturn, this EMA failed to hold as support, with Bitcoin dropping sharply to lows of $54,000.

The EMA was first tested as support in May 2024 at a price point of roughly $58,500 after forming a lower high.

Later, in late June 2024, the EMA was tested again as support following another lower high, this time at a level around $60,000.

During the final challenge in late June, the EMA helped the بازار ارز دیجیتال record a minimal price bounce before resuming its bearish trend.

The EMA serves as an average of a security's closing prices over a specified period, with a higher weight given to the more recent prices.

In this case, the long-term EMA helps to smooth out short-term price movements and identify the overall trend direction.

Hence, this EMA has been a critical technical level in determining whether Bitcoin is in a bull or bear market.

This EMA breakdown confirms a bearish trend, signaling that the support that previously helped maintain the بازار ارز دیجیتال's stability has now failed.

The steeper decline following this EMA penetration suggests that بازار ارز دیجیتال پانیک begun to set in among investors.

Historical context and technical analysis

The long-term EMA has been a reliable support level until recently. The recent breach below this EMA now indicates a confirmed bearish trend.

The analyst also projects a potential path for further price decline (red line), suggesting that BTC could continue to drop significantly if this trend persists.

The last similar EMA breakdown occurred in May 2021, marking the top of the bull market and بازار ارز دیجیتال آغاز بازار ارز دیجیتال's longest bear market in history.

This period also saw an irregular correction, with a higher high in November 2021 driven by the money supply expansion.

Currently, the بازار ارز دیجیتال conditions seem to mirror those of 2021, presenting the potential for a major بازار ارز دیجیتال correction.

Investors may have to prepare for lower Bitcoin prices as the بازار ارز دیجیتال adjusts to these new market dynamics.

The confirmed breach of this critical support level suggests that a major بازار ارز دیجیتال correction is already underway.

While this does not necessarily predict another multi-year بازار ارز دیجیتال بازار ارز دیجیتال, it does indicate that significant price declines could continue in the short to medium term.

Bitcoin price analysis: At press time, Bitcoin is trading at $54,482.91, down 4% over the last 24 hours, and has a 24-hour trading volume of $40.5 billion. Bitcoin’s recent price movements and the breakdown of a key support level signal a potentially challenging period ahead for the cryptocurrency market.

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