The Bitcoin price plunged hard, testing the lower support below $26,000 for the first time in the past 55 days. The price, however, recovered above these levels in no time, which has not been validated as a bullish reversal. Rather, many believe the price could remain under consolidation for a while, beyond which it may trigger a healthy upswing.
Here are some reasons why the probable bullish rebound may not be constructive for the crypto space and could be a huge bullish trap.
RSI at Ground Levels
The recent price plunge has caused the BTC price to drop heavily, testing pivotal support levels. The RSI has dropped to levels not seen since June 2022. A similar price crash was observed then, which was followed by a bullish reversal. Further, the bulls were trapped at the interim highs, while the price maintained a steep bearish trend for the rest of the year.
Presently, a similar price action during the same time frame appears to be repeating itself. Therefore, the larger possibility of the price plunging back to levels around $22,000 emerges after trapping the bulls at $30,000.
Bitcoin Breaking the Yearly Trend Line
The Bitcoin price has been trading along the rising trend since the beginning of the year, which has been acting as strong support. The token has been facing excessive bearish pressure in the last few weeks of every quarter. The latest price plunge dragged the levels largely below the trend line, which appears to be a tedious job for the bulls to recover above. Therefore, a decent bearish trend may have been triggered.
More than 30% of Open Interest Has Been Wiped Out
Open interest is the outstanding derivative contract that has not been settled. Therefore, a massive drop in the open interest indicates the traders have closed their positions and money is flowing out of the market. Hence, huge bearish clouds are been hovering over the Bitcoin price and the entire crypto space.
Therefore, being vigilant over the Bitcoin price trend and making wise decisions is imperative at the moment.