Bitcoin Key Levels Break: Is Capitulation Playing Out?

Importantly, bitcoin has broken the lows of May 2021.

From the minute I checked the financial news this Monday morning I have seen repeated stories of the slide in the price of bitcoin. Words like "plunge," "carnage" and "bloodbath" are all being used in the headlines today.

Let's go deeper than the headlines and check on a few charts and indicators.

In the daily bar chart of the nearby bitcoin futures contract, below, we can see that prices have made a new low for the move down and perhaps more importantly have broken the lows of May 2021. You would have to have been a buyer in 2020 to still have a paper profit. The slopes of the 50-day and the 200-day moving averages are negative.

The daily On-Balance-Volume (OBV) line has been in a decline since October and that tells us that sellers of bitcoin futures have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line. 

 

In the weekly Japanese candlestick chart of bitcoin futures, below, we see a bearish picture. The is a lower shadow in early May but prices have sunk below the low of the pattern to refresh the downtrend.

 

The weekly OBV line is pointed down as is the weekly MACD oscillator.

 

 

In this daily Point and Figure chart of bitcoin, below, we can see the breakdown and a price target of $15,750.

 

 

In this weekly Point and Figure chart of bitcoin, below, we see a target being projected of $14,783.

 

 

Bottom-line strategy: Equity traders have been looking for "capitulation" in the stock market for weeks. Maybe the capitulation is being played out in bitcoin.

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