Bitcoin (CRYPTO: BTC) fell off a cliff on March 12 after Tesla Inc (NASDAQ:TSLA) CEO Elon Musk announced on Twitter the electric vehicle and technology company would no longer accept the cryptocurrency as payment.
On Thursday, during an interview with Cryptopotato, prominent investor and “Shark Tank” co-host Kevin O’Leary suggested Tesla’s shareholders, who are connected to sustainability committees, likely pressured Musk to make the decision.
The Musk Effect On BTC Price: Musk cited environmental concerns for his reasoning but, regardless of why Musk decided to backtrack on accepting the cryptocurrency at Tesla, it enraged Bitcoin and alt-coin enthusiasts.
Similar to the outcry when Musk tanked Tesla 8% on May 5, 2020 when he went on Twitter to announce “Tesla stock price is too high imo,” Musk’s Bitcoin announcement left some feeling Musk has too much sway, through his Twitter stage, over the prices of various coins.
In the eight days following Tesla’s May 12 policy change, Bitcoin plummeted just over 47% before finding a bottom at $30.06. It has since chopped around between that level and an upper resistance level at the $42.297 mark.
See Also: How to Buy Bitcoin
The Bitcoin Chart: Within the chop, Bitcoin has settled into a descending channel on the daily chart, putting in fairly consistent lower highs and higher lows.
A descending channel is a bullish pattern, however, and on Thursday Bitcoin attempted to break bullishly out of it but was knocked back down.
The more times a stock, or a crypto, bangs its head against a resistance level, the more likely it is to bust through it. Bitcoin has been trading above the median line of the channel more often than not.
Bitcoin is pinned between the eight-day exponential moving average (EMA) and the 21-day EMA, with the eight-day EMA trending below the 21-day EMA, which is consistent with choppy price action.
This may indicate sentiment is mixed. Total daily volume in the crypto has also been dropping off, which indicates a move is about to take place. The direction will depend on whether bears come in to sell the stock or bulls come in to buy it.
Bulls want to see big bullish volume come in and pop Bitcoin up over the upper descending trendline of the channel and for continuation to push it up over resistance at $39.29. If Bitcoin can clear that level it has room to move up to $42.29.
Bears want to see Bitcoin continue trading down in the channel until it loses support at $34,849 and the support of the eight-day EMA. If Bitcoin loses those two areas as support it could fall toward the $30,000 level.
BTC Price Action: Bitcoin was trading 3.2% higher at $37,395.85 at last check Friday.