Will Bitcoin Fall to the Bull Market Support Band?

TL;DR

Bitcoin may fall to its bull market support band if it breaks below $40k, with the band around $36k–$37k based on the 20-week SMA at $36.3k and 21-week EMA at $37.3k. The case rests on weakness seen in every prior cycle during Q1 of the halving year, but historical breakdowns have unfolded differently. Read on for the key levels, signals, and precedents behind this outlook.

Transcript

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Key Insights

• Bitcoin is trading around $41k and has dropped roughly 16% since mid-January, which coincided with the spot ETF launch, though the video argues the ETF was not the main cause of the weakness.
• The bull market support band is defined by the 20-week SMA, currently at 36.3k, and the 21-week EMA at 37.3k, giving a defense zone of roughly 36k to 37k for the bulls.
• Bitcoin has finally posted a 10% drop measured from daily closes after going about 140 days without one, but it has not yet had a 15% drop as measured from daily closes.
• Q1 of the halving year has produced weakness in every prior cycle, with Bitcoin falling back to the bull market support band each time before the halving arrives.
• The 100-week SMA has been tested in the late pre-halving or early halving year in prior cycles; last cycle Bitcoin fell 45% below it, an equivalent move today would return price to the prior low.
• Last cycle Bitcoin crashed to about $4,000 around March 13, 2020, and held support at the 300-week moving average, fulfilling a prediction made in a late-2019 video.
• Bitcoin has repeatedly tested the 40k level since first breaking above it on December 4th, and if it breaks below 40k the next defense area is the bull market support band.
• Once Bitcoin closes below the 8-week SMA it has recently tested the bull market support band within a few weeks, though 2019 showed breakdowns can bounce and take months to resolve.

Questions & Answers

Q: Will Bitcoin fall to the bull market support band?

The video presents a return to the bull market support band as a plausible next move, not a certainty. Bitcoin had repeatedly tested $40k, and a break below that level would bring the roughly $36k–$37k band into focus as the next area bulls may defend.

Q: What is Bitcoin’s bull market support band?

The bull market support band is defined by the 20-week simple moving average and the 21-week exponential moving average. At the time discussed, those levels were $36.3k and $37.3k, placing the band roughly between $36k and $37k.

Q: How much had Bitcoin fallen since mid-January?

Bitcoin had dropped about 16% since mid-January and was trading near $41k. Measured from daily closes, it had finally recorded a 10% decline after roughly 140 days without one, but it had not recorded a 15% decline on that basis.

Q: Why was Bitcoin weakening during the halving year?

The video attributes the weakness primarily to a recurring cycle pattern rather than solely to the spot ETF launch. In every prior cycle cited, Bitcoin weakened during Q1 of the halving year and returned to the bull market support band before the halving.

Q: Did the spot ETF launch cause Bitcoin’s decline?

The spot ETF launched around the same mid-January window in which Bitcoin began weakening. The speaker concedes that the heavily anticipated event had some impact, but argues that the broader halving-year pattern was the main reason for the decline.

Q: What Bitcoin price levels matter below $40k?

If Bitcoin breaks below $40k, the next highlighted defense zone is the bull market support band around $36k–$37k. The video also identifies $38k as an area of interest because Bitcoin had built up there before moving higher.

Q: What does a close below the 8-week SMA suggest?

Recent closes below the 8-week SMA were followed by tests of the bull market support band within a few weeks. However, the 2019 example included a rebound above the average, a lower high, and a decline that took about two months to return to the earlier wick.

Q: What happened when Bitcoin tested long-term moving averages in 2020?

Bitcoin fell about 45% below the 100-week SMA and reached roughly $4,000 around March 13, 2020. It then tested and held the 300-week moving average, matching an earlier idea based on prior cycles holding the 100-week and 200-week averages.

Summary & Key Takeaways

• Bitcoin sits around $41k and has fallen about 16% since mid-January, which was flagged months earlier as the next window of weakness. That timing matched the spot ETF launch, but the video attributes the drop mainly to seasonal halving-year patterns rather than the ETF itself.

• In every prior cycle Bitcoin has weakened in Q1 of the halving year and fallen back to its bull market support band. The band now sits between roughly 36k and 37k, with the 20-week SMA at 36.3k and the 21-week EMA at 37.3k, and 38k as an additional level of interest.

• Historical drops show how severe corrections can be: last cycle Bitcoin fell 45% below the 100-week SMA to about $4,000 in March 2020, holding the 300-week moving average. The 8-week SMA and 2019 example illustrate that breakdowns often bounce first and take months to fully play out.