Bitcoin (BTC) – Smashed by a broad-based drop in risk sentiment; now looking at $21,000

Bitcoin (BTC) – Smashed by a broad-based drop in risk sentiment; now looking at $21,000

Bitcoin (BTC) was smashed by a broad-based drop in risk sentiment, following the hotter-than-expected U.S. inflation data which fueled bets on even more aggressive policy tightening by the Federal Reserve, and the Celsius move. The big-fat sell-off squeezed the crypto-king below the critical May 12^th bottom, paving the path straight towards the 161.8% Fibonacci extension level of the last up-leg.

The recent Bollinger bands expansion is mirroring the sharp increase in the market volatility, something that can be also confirmed by the uptick in the Average True range. Additionally, the oscillators are promoting further bearish developments, as the Momentum indicator is plummeting in the bearish territory and the TSI dipped back below its signal line, and is currently sloping downwards.

As of that, the road is now clear for the sellers to extend the descent towards the 161.8% Fibonacci extension level of 21,100 and the nearby 20,000 handle. Any violation here will shift the spotlight straight towards the 227.2% Fibonacci extension level of 16,500.

To the upside, the buyer will need to push hard to recoup some of the recently lost ground, and may meet initial upside constraints at the May 12^th low of 25,400. A step higher could find a new restriction on the mid-Bollinger band currently residing around 29,500. Overstepping that barricade too may trigger a test of the May 31^st high at 32,400 before attention turns to the February 24^th inside swing low of 34,300. In the event buying pressures endure, the price could advance to the March 7^th bottom of 37,100.

Overall, Bitcoin has been dropping consistently over the last few days, sustaining a sturdy bearish bias, with sellers looking now at the 21,100 key level.