Bitcoin (CRYPTO: BTC) slid more than 5% lower between 4 p.m. on Wednesday and 8 a.m. on Thursday before beginning to recover.
The drop was caused when Tesla Inc (NASDAQ:TSLA) printed its second-quarter financial results, showing it had liquidated about 75% of its Bitcoin holdings to add $936 million to the EV giant’s balance sheet.
The news was met with scorn from retail traders who took to social media to voice their anger and disappointment in Tesla’s decision. In May of last year, Tesla CEO Elon Musk took to Twitter to indicate he had diamond hands when it came to his crypto holdings, which many took to mean he would not be selling any of his positions.
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From a technical standpoint, Bitcoin was due for a pullback and despite the lower prices, Bitcoin’s chart remains healthy.
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The Bitcoin Chart: Bitcoin reversed course into an uptrend on July 3 and has since made a consistent series of higher highs and higher lows. Bitcoin’s most recent higher high was formed at the $24,287 mark on Wednesday and the most recent higher low was printed on July 16 at $20,755.
- Thursday’s low-of-day may serve as the next higher low within the pattern and if that’s the case, Bitcoin is likely to rise up and print another higher high over the coming days. Bitcoin could also continue to trend slightly lower in consolidation before breaking up above Wednesday’s high-of-day, which would be healthy as long as the crypto doesn’t print a lower low.
- Bitcoin may also be settling into a bull flag pattern on the daily chart, with the pole formed on Monday and Tuesday and the flag forming since then. If the pattern is recognized, the measured move is about 15%, which suggests the crypto could shoot up toward the $25,800 level.
- If Bitcoin closes the trading day over $22,800, the crypto will print a hammer candlestick, which could indicate higher prices will come on during Friday’s 24-hour trading session. If the crypto closes the trading day near its low-of-day price, Bitcoin may trade lower again during Friday’s session.
- It should give bullish traders confidence that on the pullback, Bitcoin has remained trading above the eight-day and 21-day exponential moving averages as well as the 50-day simple moving average. Bearish traders will want to see the moving averages lost as support over the coming days.
- Bitcoin has resistance above at $25,772 and $29,321 and support below at $22,729 and $19,915.
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