Bitcoin Plunges Below Support As Price Crashes To $42,500

Bitcoin appeared to have been securely floating above support just earlier, but today, the picture has changed as the price has suddenly crashed to $42,500.

Bitcoin Has Crashed More Than 6% During Past 24 Hours

Bitcoin had kicked off 2024 with some sharp bullish momentum as the market had been looking toward the potential ETF approvals with hopeful eyes. The asset had only been at the $45,000 level not seen since April 2022 for just a couple of days before the price suddenly crashed.

The chart below shows how cryptocurrency has performed during the past few days.

Looks like the coin's price has plummeted during the last 24 hours | Source: BTCUSD on TradingView

During this plunge, Bitcoin had briefly hit a low under $41,500, but the cryptocurrency has since seen a bit of a rebound as its price is now trading around the $42,500 level.

As is usually the case, the rest of the sector has also plunged alongside the original digital asset, with most coins registering drawdowns of even greater degrees.

Just before this crash, Bitcoin had been floating above a critical support line and appeared set to continue its recent bullish momentum.

Bitcoin Had Broken Above An Ascending Triangle Pattern With Recent Rally

In a post on X before the crash, analyst Ali had discussed where the Bitcoin price might be heading after its break above the $45,000 level based on technical analysis data. Below is the chart that the analyst shared in the post.

The pattern that had formed in the 4-hour price of the cryptocurrency | Source: @ali_charts on X

In the graph, Ali highlighted an Ascending Triangle pattern that Bitcoin appeared to have successfully broken out of with the price surge. An “Ascending Triangle” refers to a continuation pattern of two trendlines forming a triangular shape.

One of the trendlines is a horizontal level made by connecting highs in the asset, while the other is a diagonal line that joins together higher lows. The pattern is “ascending” in its name as the overall consolidation between these two trendlines narrows towards the upside.

Generally, when the price retests the horizontal level, it could likely feel some resistance and form a local top. If the resistance is broken through, it could be a sign that the asset would now display some continued upward momentum.

Similarly, the diagonal line is usually a point of support for the asset, and sustained breaks below could be to watch out for, as they can signal that a bearish trend is taking over.

From the chart, it’s visible that Bitcoin had gained some distance over the triangle above earlier and had appeared to be finding support at the 0.786 Fibonacci ratio, which is situated at around $44,900 for the asset.

Ali had noted that if sustained buying would continue at this support, Bitcoin might be able to push towards the $49,000 level. But as it has turned out, the market had other plans for the cryptocurrency, as its price has plunged far below this support level.

Featured image from Kanchanara on Unsplash.com, charts from TradingView.com

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