Bitcoin overview: Bitcoin bulls fall into bears’ trap

BTC/USD bulls are licking wounds under $3,800.
More downside looks likely if the prices fail to recover shortly.

Bitcoin (BTC) broke above $4,000 only to crash spectacularly under $3,800 a few hours later. BTC/USD is changing hands at $3,779 at the time of writing, down 10% from the recent peak of $4,187. The inability to settle above critical resistance area after a breakthrough and develop a sustainable upside momentum bodes ill for Bitcoin bull, at least in the short run.

"What goes up must come down and that which pumps must eventually dump. That last sell-off is a sobering reminder that crypto is extremely volatile and high risk. Let's see if we can hold here $3,800 would be a nice place to build support, ”Matings Greenspan from eToro wrote in his Twitter account before the prices broke below $3,800 handle.

BTC/USD moved under DMA100 (currently at $3,780). Thus, now we are looking at $3,600, which is the next critical support for BTC/USD created by SMA200 (4-hour chart) and DMA50. Once it is broken, the downside may be extended towards $3,350-$3,300 congestion area.

On the upside, we need to see a recovery at least above $3,850 (SMA200, 1-hour). The next target is located at $4,000 and the recent high of $4,187.

However, considering the neutral position of the Relative Strength Index (RSI) and a lack of enthusiasm on the market after the sell-off, the bull might need some time to lick their wounds before another assault.

BTC/USD, 1D chart

Share: Cryptos feed

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.