Bitcoin resistance levels explained for new investors

Many of Gamdom’s players are also crypto traders so you can talk to them about market predictions and profitable opportunities. If you wish to find this information yourself, then you have to know how the crypto market works. One of the factors that you have to keep an eye on is the Bitcoin market resistance.

Looking at the candlestick graph, you can see how the Bitcoin market price can quickly rise and fall. Most people who are only interested in the asset’s short-term use see it as a simple indication of its price. For investors, it’s the history of growth in profit over time. Traders look at it as a guideline for what to do with their Bitcoin in a few weeks or months. If you are interested in trading, then you have to know what resistance is and how to spot it.

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Resistance level definition

Bitcoin resistance is the point of the cryptocurrency’s possible lowest price. It can be affected by many factors and the results are never set in stone. However, it is almost always reliable data based on history. Essentially, the Bitcoin resistance price is the most recent high point that it reached and can’t break past for a variety of reasons.

This high point in question can be a few months ago or even from last year. What you have to look for is not the all-time high but the asset’s highest point before it dipped. Using Bitcoin’s recent price changes, it is easy to use €53,000 as an example of its resistance price. The asset went beyond it as it reached a new all-time high at €59,000 but it went back down.

€53,000 is the asset’s resistance level because it reached several other high points, €53,175 on 14 April, €52,278 on 25 October, and €52,653 on 26 November. The price dipped as it headed for the asset’s price floor but it is bound to rise up again. If that happens, then traders will assume that the next rally won’t break past €59,000 because it will meet its resistance level.

Support level definition

Resistance level comes hand in hand with another part of the Bitcoin market price. This is called the ‘support level’ and it is the complete opposite of the resistance level. If resistance marks the limit of the price surge, then support is the last point in which it drops.

The best time to invest in cryptocurrency to top up your Gamdom wallet is when the Bitcoin price dropped near the support level. That’s because this is the cheapest price that it will be available for. Using the same Bitcoin resistance price example above as of 11 December 2021, it dropped down to €41,718 but then it abruptly rose on the next day before dropping again a little bit.

Experts predict that it can still drop lower with the support level being €25,286 from 21 July 2021. This is supported by the €25,164 price floor on 28 January 2021. However, it is also possible that it finds a new support level that aligns with 29 September’s €35,119 price. Either way is a great time to invest as the price will rally in 2022.

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Reasons why resistances occur

There are a few factors that contribute to creating resistance levels in Bitcoin prices. Many of them are due to how the asset’s price is affected by supply and demand.

The limitations of Bitcoin’s ecosystem

Bitcoin is striving for global adoption but it finds plenty of obstacles. Besides Gamdom and other online casinos, there are only a few businesses that support Bitcoin as acceptable payment. Many of them have services limited to a country or they are finance companies that offer investment solutions for cryptocurrencies.

Bitcoin market trends

Bitcoin is a popular asset to trade that its price changes are reported on the mainstream news. Expert traders are often generous enough to share their insights with their followers. Hundreds of them often have the same predictions in the coming weeks for the asset. When they all suggest selling or buying at a given time, then thousands or millions of users will follow. If everyone is selling at a given time, then the Bitcoin price is bound to meet resistance in the following days.

Current events in the crypto community

Bitcoin has a fragile market with volatile prices because of major influencers. A famous example of this is the crypto crash of May 2021. One of the reasons that it happened is that Elon Musk, owner of Tesla Motors and a major crypto influencer, announced the company’s temporarily discontinued support for Bitcoin.

Musk explained that a big reason for this decision is that Bitcoin consumes a dangerous amount of energy. The Environmental, Social, and Governance (ESG) investors in Wall Street followed in his footsteps which halted Bitcoin corporate trading in various exchanges. It lowered the resistance levels to €32,337 for a time until the asset became El Salvador’s new legal tender and reliance on fossil fuels dropped.

Common strategies for when resistance levels are identified

Identifying the support and resistance level can be difficult so don’t rush it. Compare with other people’s conclusions if you have to or simply use somebody else’s findings to form your strategy around. Once you have identified the resistance levels, you use the following strategies:

Hold on to your current Bitcoin when the market price is near the resistance level

If you are an investor then you have to pay attention to how close the market price is to the resistance level. It’s better to stop buying until you get an idea of what is to come. Depending on the current events or Bitcoin trend, it may drop down or break past its resistance point. Bitcoin keeps breaking price ceilings in 2021 so many are hopeful at seeing it reach another level.

However, it is unlikely to breach the resistance level if the rally came from a price point that is way above the support level. Bitcoin market trends often follow momentums because of their volatile nature. Your best bet of breaking past the resistance level is from a rally that started from the support level. If you are unsure, then it’s better to hold onto your Bitcoin for now. 

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Sell below the resistance level when the market is surging

You have to assume that other traders or investors are aware of resistance levels. It is one of the most basic principles of trading assets that applies to both crypto and properties. That’s why your best bet at selling Bitcoin if you want to, is below the resistance level at any date. This is most effective when selling while there is a bull market since buyers are more likely to wait until the price reaches the support level.

Even if the price reaches beyond the resistance level that you have identified, it does not mean that Bitcoin will continue to consistently reach that point. The resistance level given in the example above is €52,000 because Bitcoin is constantly being pulled to that price level. 

Traders don’t feel frustrated when Bitcoin prices break past resistance levels even after they sold their assets. Bitcoin broke past €55,000 from time to time but it is often met with large dips afterwards because buyers won’t buy above the resistance level. Plus, that surge often only lasts a day. That time frame is way too short to have a freshly placed order to be taken.

Anticipate the next market trend

Bitcoin is likely to reach another price floor once it touches the resistance level after the surge started from the support level. If that happens, then Bitcoin has a high chance of reaching a higher support level on its next dip. This can either mean that the asset will be stable for a week or a month before it dips or it will slowly break past its resistance level. 

That only happens when Bitcoin is reaching new milestones on its quest for global adoption. Always stay tuned to current events. You can find such important updates on Gamdom blogs. 

Bottom line

Identifying the Bitcoin resistance level is a big part of trading. It helps determine a guideline for how much buyers are willing to pay for Bitcoin and when it is best to place an order. The Bitcoin resistance price is not the asset’s price ceiling. Price will still continue to break beyond, even to the point of reaching a new all-time high but it won’t stay there for long. The farther it breaks past the resistance level, the faster it drops to its support level.

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Words: Clarence Clarke