Is Bitcoin heading down to $38K?

The mechanics have reset with Open Interest pulling back and Funding being relatively positive, close to the 0.01% mark. 

However, BTC is battling at a crucial technical level that needs to hold; otherwise, a more significant downside is likely. 

Now, this is the key question, "is Bitcoin heading back to $38K?

Technical analysis

• Currently, on the 12-hour timeframe, BTC looks to have lost the main uptrend line. A close below the uptrend line on the 12hr would be the first major sign of weakness.
• BTC is also battling at the horizontal support of $40,900 down to $40,600. This is a key level for BTC to find some support and bounce from in the short term. If not, this likely leads to a more considerable downside.
• The main horizontal support to the downside if the price loses its current level is $38,000 to $38,300.
• The local resistance will be the underside of the uptrend line, around $41,800.
• The RSI has finally reset on all major timeframes except for the Weekly, which remains overbought but only just about. However, the 12-hour and the 1D have reset really nicely now.

Cryptonary's take

However, the uptrend line looks lost unless we get a major turnaround in the upcoming 13 hours or so. 

Therefore, the underside of the uptrend is likely to act as a resistance. Despite the mechanics looking healthy again, we see BTC trading lower in the coming weeks, even if there is a short-term bounce to retest the underside of the uptrend line. 

We see the likely destination of the move down to test $38,800.