It now appears that the break below this level has put the crypto in precarious territory, potentially opening the gates for significantly further near-term downside.
This comes as the market’s open interest on margin trading platforms balloons past $1 billion, which is a bearish sign that is historically followed by intense downwards momentum.
Bitcoin Struggles to Find Support as Bears Continue Pushing It Lower
At the time of writing, Bitcoin is trading down just over 2% at its current price of $8,620, which marks a notable decline from daily highs of just under $9,000 that were set yesterday when bulls attempted to recapture its position within the $9,000 region.
The firm rejection at this level, however, led the crypto to continue inching lower, leading it to drop as low as $8,400 overnight.
The crypto was able to find some strong support at this level, although it has yet to decisively recapture its position above $8,700 – which was a key support level for BTC prior to its sharp overnight downtrend.
One factor that could spell trouble for Bitcoin is the fact that its open interest on BitMEX is once again over $1 billion, which is typically an occurrence that is followed by significant selloffs.
Mac, a popular cryptocurrency analyst on Twitter, spoke about this in a recent tweet, concisely saying “welcome back” while referencing a chart showing the growth of Bitcoin’s OI.
Welcome back pic.twitter.com/UkMaSXuW9W
— Mac 
(CEO of $OGN the next $MATIC) (@MacnBTC) February 28, 2020
BTC Just Lost a Key Support Level, Signaling a Severe Correction is Inbound
Prior to the overnight selloff, Teddy, a popular cryptocurrency analyst on Twitter, explained in a tweet that $8,700 was an incredibly important level for bulls to hold the crypto above, with the recent break below this level opening the gates for a “severe correction.”
“BTC: Still no bounce from this level. This old resistance now ‘support’ is clearly a significant level as price wicked below a few times – but always closed above! Lose it and correction will be a lot more severe,” he noted.
#BITCOIN | $BTC
Still no bounce from this level 
This old resistance now ‘support’ is clearly a significant level as price wicked below a few times – but always closed above!
__
Lose it and correction will be a lot more severe pic.twitter.com/zYmSyiIcGj
— TEDDY (₿) (@TeddyCleps) February 27, 2020
If bulls are unable to recapture this level and catalyze some short-term momentum, it is likely that the ongoing downtrend is still in its early phases, and that significantly further downside is imminent.
Featured image from Shutterstock.