How Deep Could BTC Crash If Bulls Fail to Defend $107K–$110K Support Zone?

This is a daily analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.

Bitcoin's BTC$89,274.20 price recovery following Friday's crash has been tepid at best, leaving prices dangerously close to the key support zone. The outcome here could set the stage for significant moves.

BTC rallied to $116,000 after Friday’s sharp drop, during which prices fell to nearly $105,000 on several exchanges. However, as anticipated, the recovery was brief, with prices falling back to trade near $110,000 amid bearish signals from key momentum indicators.

According to the daily candlestick chart, the $107,000 to $110,000 range forms a crucial support zone, identified by intraday highs from December to January and intraday lows from September. The convergence of these highs and lows suggests both bulls and bears have struggled to assert control in this region, making it a pivotal battleground for the market. Besides, the 200-day simple moving average (SMA) is now located at around $107,500.

This raises a crucial question: what happens if the $107,000–$110,000 support zone fails to hold? A potential breakdown would indicate that sellers have gained the upper hand, exposing bitcoin to a deeper sell-off.

The first line of support in that case could be $98,330, the swing low registered on June 22. Below this, the focus would shift to the lower end of the ascending channel, currently seen at around $82,000.

Warning Signs of Possible Sell-Off

Recent price action within a well-defined bullish channel, drawn by connecting the higher lows from October 2023 and August 2024 with a parallel trendline through the high in March 2024, suggests overbought conditions and scope for a deeper pullback.

Bitcoin's uptrend since 2023 has been mostly steady and sustainable, as shown by price movements contained within a parallel channel sloping at approximately 45 degrees.

In recent weeks, bitcoin’s price has repeatedly topped the upper boundary of the well-defined channel, signaling moments of over exuberance or overbought conditions. These breakouts signaled moments of over exuberance or overbought conditions, but have been short-lived, with prices quickly falling back to suggest buyer exhaustion.

Thus, a deeper sell-off cannot be ruled out. Note how prices repeatedly failed to establish a sustained foothold above the upper boundary in December-January. This repeated rejection eventually paved the way for a sharp slide, with prices falling to around $75,000.

That said, traders need to watch for a bounce from the crucial $107,000–$110,000 support zone. A strong rebound here, coupled with a quick invalidation of lower highs through a move above $116,000, could set BTC on a path toward challenging its record highs.