After losing these key support levels, Bitcoin will slide into a bear market: analysts

After months of consolidation, Bitcoin price has lost key support levels, signaling the start of a new bear market.

While on-chain analysts are sounding the alarm about the high cost base of new Bitcoin owners, technical analysts note Bitcoin's low price below its 200-day SMA.

Is the bull market over?

The 200-day SMA, or “simple moving average,” is a trend line that tracks the average price of Bitcoin over the past 200 days.

Following Bitcoin's surge to a new all-time high in March, Bitcoin's price has mostly remained in the range between $58,000 and $70,000, including a brief crash below $50,000 in August. This consolidation period has given it enough time to reach the 200-day SMA and is now above the market price.

Adel Axel Jr., the author of Verified CryptoQuant, said that the loss of this support “typically indicates a bearish sentiment.”

“Also, in recent days, it has been used on the top three exchanges,” he said on Twitter on Monday. “The nearest support level is the 365-day SMA ($50k).”

Axel Jr. did not indicate the official start of the bear market, however: on Sunday, he called Bitcoin's five-month consolidation since March “healthy” while the majority of early investors slowly took profits, associating no “massive stress-induced panic selling”. “Realized losses have exceeded profits, which usually occurs at the end of a consolidation period,” he added.

Going forward, the analyst agreed that a “double test” of the $50,000 price level would be a “good scenario.”

Short term containers now in the water

Looking at on-chain data, Glassnode analyst James Check said on Sunday that more than 80% of short-term Bitcoin holdings have been underwater since they were last bought. Short-term holders include all those who bought their coins five months ago – a large group of holders who are more likely to sell their coins when the market looks shaky.

“This is similar to the middle of 2018, 2019 and 2021, which indicates that many investors are at risk of panic and panic,” Czech wrote.

That said, the true scale of these losses is still shallow, meaning recent investors may not feel any fear yet. “Even though 80% of STH coins are in losses, the amount of unproven losses is only 4% of the market cap,” Czech continued.