Bitcoin (BTC) has been seeing significant momentum in previous weeks as its price was approaching the precious $20,000 all-time high. However, an abrupt end came to this glorious rally, with Bitcoin price crashing severely over the past 24 hours.

Cryptocurrency market, 1-day performance. Source: Coin360

While most investors were celebrating a potential new all-time high, the price of Bitcoin dropped from $19,500 to $16,300, a drop of 15% in less than 24 hours. The majority of the crypto markets also followed suit with alts in the deep red across the board on Nov. 26.

Bitcoin loses crucial level for support and drops heavily

BTC/USD 1-hour chart. Source: TradingView

The crucial area to hold between $18,400 and $18,700 was lost. This area was vital as support due to several reasons. The first one is the immediate failure of the uptrend.

If Bitcoin’s price dropped below this support level, it means that the uptrend of flipping every previous resistance to support failed.

As the chart shows, the breakdown caused a downward chain reaction. This is the second reason, as losing that level triggered many stop/losses fueling the drop.

Previously, many traders likely anticipated a further up-move, as the funding rates were favorable on most exchanges. This breakdown and the imminent chain reaction of stop/loss triggers are a typical outcome of a trend reversal.

Indeed, it’s quite common that market corrections don’t happen in a smooth manner. They are often vertical and painful. Staircase up, elevator down.

Total market cap likely to correct to $400 billion

Total market capitalization 1-week chart. Source: TradingView

The weekly chart of the total cryptocurrency market capitalization often shows a much clearer perspective.

In this manner, the total market cap reached the 1.618 Fibonacci level, where it hit resistance, similar to the $600 billion range.

More importantly, the total market cap established a new higher high and broke above the previous resistance zone at $400 billion.

This breakout above $400 billion was the first breakout in more than two years, as this level served as a difficult hurdle for the past few years.

Therefore, a correction back to this resistance level to confirm as new support should be almost expected and certainly healthy at the start of a new bull cycle.

More importantly, a correction toward this level would also line up with the 0.35–0.382 Fibonacci region, which is often used by traders and investors to look for a potential entry.

What are the levels to watch for Bitcoin?

BTC/USD 3-hour chart. Source: TradingView

The Bitcoin price chart shows a breakdown below the $18,500–$18,800 area and that’s immediately the most important resistance to break if the market is to turn bullish again.

Regardless, the region between $15,800 and $16,300 is a crucial support zone to hold and is currently holding as one on the daily timeframe.

In that light, a new range is established. As long as Bitcoin sustains support above $15,800–$16,300, the bull market is likely to resume.

However, if it fails to hold support, a further correction toward $13,800–$14,200 should be expected next. This level is the summer 2019 high, where the next bullish support/resistance flip can occur.

On the higher timeframes, $18,000–$18,200 is the first clear hurdle to break, as that was the level the price of Bitcoin failed to break earlier today on the rebound. If that breaks, the next area to watch is $18,400–$18,800, at which today’s downward chain reaction began.