Bitcoin Price Caught Between Key Support Levels as Bearish Sentiment Grows

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Bitcoin price is struggling to reclaim $9,000, leading investor sentiment to turn bearish on BTC’s short-term price action.

Bitcoin (BTC) price had a relatively muted day as the digital asset traded between $8,700-$8,885.

Currently, the price remains below the ascending channel trendline and the daily candle closed as a neutral doji, showing bulls and bears are in contention on the direction Bitcoin will take over the short-term.

Crypto market weekly price chart. Source: Coin360

As the price searches for direction and its dominance rate drops from 67% to 65.5%, a handful of altcoins continued a multi-day streak of impressive double digit rallies.

Despite Bitcoin price finding difficulty in reclaiming $9,000 and re-entering the ascending channel  Cointelegraph reported that the majority of top traders at Binance remain long on the top ranked digital asset on CoinMarketCap and a number of large cap altcoins.

Investor sentiment takes a knock

Interestingly, data from TheTIE, a crypto-oriented alternative data provider, shows that investors are growing increasingly bearish about the short-term price prospect of Bitcoin price.

Daily Sentiment Score vs Price (BTC). Source: TheTie

As shown by the chart above, over the past week Bitcoin’s price drop corresponds with a drop in sentiment. TheTIE defines the daily sentiment score as “a measure of how positive or negative conversations on Twitter have been about a particular coin over the last 24 hours vs the previous 20 days. A score below 50 implied that conversations are becoming more negatives.”

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Previous analysis by Cointelegraph has uncovered the relationship between tweet volume, Bitcoin mentions, trading volumes and spot prices so keeping a gauge on crypto-related social activity is a practice many crypto investors find useful.

Crypto Fear & Greed Index. Source: Alternative.me

The Crypto Fear & Greed Index, another popular Bitcoin sentiment metric traders typically counter trade, also shows a sharp decrease in bullish investor sentiment. Currently the indicator reads ‘Fear’ and is at 39, a sharp drop from last week’s ‘Neutral’ reading of 50.

Last week as Bitcoin price repeatedly bounced off the ascending channel trendline investors felt some reassurance in the digital asset securing a close above $9,300 as the channel had provided strong support for more than two months. But, once the price closed last week below the channel bullish sentiment dropped.

A close above the 20-MA is needed

Despite remaining below the ascending channel and $9,000, Bitcoin price is beginning to notch daily higher lows and the MACD histogram hints at a decrease in bearish momentum.

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Even though reclaiming the $9K handle would be a positive development, the price now trades below the long-term descending trendline from the 2020 high at $10,500. A more encouraging sign would be for the price to close above the 20-day moving average at $9,240.

BTC USDT daily chart. Source: TradingView

For the past few days $9,000 and $9,100 have been resistance levels the price struggles to overcome and the price has been pinned below the 20-MA since dropping from $9,800 on May 20.

Currently the price is working its way back toward $8,900 and a push above $8,950 would open the door for a quick move to $9,100 but resistance at this level and $9,200 could lead to a quick rejection.

A number of traders are also viewing $9,300 as a possible resistance level to open shorts, therefore, as an entry at the current price doesn’t appear to offer an attractive reward for the risk.

BTC USDT 1-hour chart. Source: TradingView

There’s also a head and shoulders pattern on the 1-hour timeframe, meaning repeat rejections at $8,880 could lead to the completion of the right shoulder and cause the price to drop below support at $8,700.

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As mentioned earlier, Bitcoin price is now painting higher lows on the daily-4-hour chart and buyers have bought the recent dips to $8,700. For the short-term traders can watch for a 4-hour close above $9,000 and $9,100 to see if the price can hold above either level.

In the event that Bitcoin drops below $8,700, the volume profile visible range shows $8,550 as the last level of support before the price could drop to the $7,700-$7,450 range.

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