As Bitcoin (BTC) retests a critical support level, analysts are warning that the leading cryptocurrency is facing its biggest week in months that could make or break its recovery.
Bitcoin price at a crossroads
On Tuesday, Bitcoin fell below support at $76,000 for the first time in a week, falling to $75,666 before recovering. The flagship cryptocurrency is trading between $74,000 and $80,000 after breaking a three-month range earlier this month.
Among his latest results, analyst Sjuul of AltCryptoGems confirmed that BTC is at a pivotal moment that could determine its fate as both technicalities and fundamentals are “at a crossroads.”
From a technical perspective, he explained that the cryptocurrency is currently facing “the most important resistance on the chart.” It is worth noting that the $80,000 area is at the top of a rising channel or bearish pattern developing on the BTC chart. It also marks a key horizontal level that is the main support zone from the Q4 2024 rally.
Additionally, there is a setup around this level that is reminiscent of price action in January. At this time, Bitcoin was trading within a bear flag pattern and faced forceful resistance around the $97,000 horizontal level. After failing to regain the area, the flagship cryptocurrency fell to a low of $60,000.
The analysis shows that an initial rejection from this level is normal, however, investors should monitor BTC’s reaction below this level. “As you can see, the local structure remains bullish, so it will be important for buyers to maintain momentum here to attempt a breakout again,” Sjuul detailed.
Therefore, the “line in the sand” will be around the $74,000 support because that is where the structure and previous resistance converge. “If the bulls manage to maintain this level, we really have a good chance of breaking above $80,000 and potentially hitting the next resistance level at $86,000,” he added.
FOMC meeting to determine BTC fate?
Sjuul warned that this week is likely “one of the most important weeks for BTC in months,” citing Wednesday’s FOMC meeting as the biggest catalyst for the market that could push prices in either direction.
He stressed that this would also be the last meeting of Federal Reserve (Fed) Chairman Jerome Powell. “Wednesday is not just a decision on interest rates; it is Powell’s last press conference. Every word will carry extra weight.”
Analyst Ted Pillows pointed noted that the appointment of a modern Fed chairman has put pressure on markets in the past, with Bitcoin falling by more than 50% each time. In January 2014, after Janet Yellen took power, BTC fell by 84% in the following months.
Similarly, the flagship cryptocurrency fell 73% and 61% in February 2018 and May 2022, when Powell was confirmed for his first and second terms. If history repeats itself, Bitcoin could suffer a major correction next month when Kevin Warsh is expected to become the next Fed chairman.
Ultimately, Sjuul stressed the importance of this week’s $74,000 support, noting that if that level is lost, “things could get really bad because we would create a very nasty deviation” back to the previous range, which could open the door to a retest of February’s lows.
Featured image from Unsplash.com, chart from TradingView.com
