Bitcoin fell through a key level and is giving a bearish signal. Here’s what chart analysts say happens next

Published Fri, Aug 18 20233:26 PM EDT

Bitcoin tumbled to finish the week after many weeks of stillness in the market, and chart analysts say it's possible this could be just the beginning. The cryptocurrency breached the $26,000 level on Friday, hitting a two-month low and dipping to $25,533.70 at one point. The big drop, which began Thursday evening, appeared to be set off by speculation around Elon Musk's SpaceX writing down the value of and selling its bitcoin. However, the virtual currency was already under pressure from rising rates and a stronger dollar – and chart analysts it could have further to fall still. Bitcoin also broke its 200-day moving average of $27,300, which could signal an impending downtrend. "Unfortunately, the setup for bitcoin still looks pretty ominous to me," as do most risk assets, Wolfe Research's technical analyst Rob Ginsberg told CNBC. "You never know what the impetus will be, but as we discussed in our note earlier this week , deteriorating trend and momentum were both suggesting a significant break lower for bitcoin." BTC.CM= 5D mountain Bitcoin lost as much as 9% Thursday night and continued falling Friday. "Now oversold, with key support in the $24,750 to $25,000 area, we're close to finding some relief. [We] might need one more flush first," he added. "Looking out, following a dead cat bounce, I wouldn't be surprised if it tested $20,000 before year end." A range emerges between $25,000 and $30,000 Bitcoin has been here before. The $25,000 level was a key resistance threshold from last summer through March of this year after bitcoin briefly touched $30,000 in its banking crisis-fueled rally. That $25,000 threshold was in focus again in June and July as bitcoin made another attempt to sustain $30,000 — this time it was fueled by speculation around the BlackRock bitcoin ETF filing. All this price action is now establishing a clear trading range between $25,000 and $30,000, said Julius de Kempenaer, a technical analyst at StockCharts.com. "These levels are fairly rough as bitcoin tends to over or undershoot easily by $1,000 or more, but the range on the chart is clear," he said. "This also means that we can get fairly reliable follow up signals when bitcoin leaves this range." Should bitcoin extend its losses, de Kempenaer said to watch its March 2023 low of $19,500 as the next target. If it rises, however, the March 2022 high of $48,000 is within the realm of possibility. "With the upper and lower boundary getting more and more defined, the most likely scenario in the near term is for BTC to keep bouncing between 25k and 30k," he said. Ari Wald, head of technical analysis at Oppenheimer, said similarly that the drop is "indicative of a trend changing from an uptrend to a sideways range." He's looking at $24,770 as his next support level to watch. His upside target is the 200-day moving average of $27,300. Fairlead Strategies' Katie Stockton puts the next downside target a little higher at $25,200, with a secondary target level of $20,600. "Our short- and intermediate-term gauges point lower, whereas long-term indicators remain improved (but, not positive)," Stockton said. "The setup supports a breach of $25,200, which would further increase downside risk for bitcoin."