Bitcoin (BTC) continued to fall yesterday. The course did bearish trend change and sank even more than the Bulls had waited. Market fears are rising again and opinions are strongly divided on whether this was for the worst.
Bitcoin price drops 5%
The bitcoin price has already crashed last week and started to continue its decline on Sunday night. There was hope that Bitcoin would soon find support to counter a trend reversal, but the price continued to fall. The $42,000 did not stick, and neither did the $41,500. Subsequently, bitcoin also quickly fell through the $41,000, the $40,500 and even the $40,000.
Bitcoin fell through all of these levels, eventually reaching $39,450. On some cryptocurrency exchanges, the price even reached $39,200. That’s the lowest price for bitcoin in a month, and the rally of the last few weeks is all but gone.
Overnight $39,450 held and early this morning Bitcoin started to rise again. Bitcoin is currently trading at $40,200 on KuCoin and $37,000 on Bitvavo. This means that the share price is down 4.9% today and down 13.8% from a week ago.
Strong fear of return to the bitcoin market
Bitcoin’s Fear and Greed Index is 20: Extreme Fear
Current price: $39,666 pic.twitter.com/ZCmcGKxiRM
— Bitcoin Greed and Fear Index (@BitcoinFear) April 12, 2022
Bitcoin’s current decline began last week, when it was revealed that the Federal Reserve will tighten its policies in May to curb rising inflation. This creates a lot of uncertainty in the financial markets, especially in the riskier stock markets with which Bitcoin has a high correlation. Stock markets like the S&P 500 also turned red yesterday.
The market is currently wondering if the Fed will crash the stock markets before turning the printer back on or the other way around. This could be very exciting in the coming months.
The drop in bitcoin is accompanied by a rise in the price of the dollar index (DXY). Analysts were convinced that DXY had now peaked and that a trend reversal could bode well for bitcoin. DXY, on the other hand, continued to rise yesterday, but how long can this continue?
US inflation figures are due out later today. However, the US government has already warned that the consumer price index (CPI) could be too high. That could add even more fear and volatility to the markets.
What can bitcoin price do now?
Whether Bitcoin has finally bottomed remains to be seen. Analysts are currently very divided on this. Some analysts remain very bullish and see this as a pretty standard fix. In his opinion, despite the pullback, bitcoin still has a higher low established and the price has moved to a higher range since a month ago.
The $33k-$46k zone has morphed into a $37.2k-$48.2k zone for #bitcoin
The new lines in the sand have now been drawn: pic.twitter.com/hcxfjL8OUX
— Matthew Hyland (@MatthewHyland_) April 11, 2022
Should Bitcoin drop further, according to analytics firm InTheBlock, a lot of support is now hovering around $39,000, as a large amount was bought there:
Buying activity has been concentrated around the $39,000 level, where 483,000 BTC was previously purchased, so this is the price to watch.https://t.co/5B1QuAzPqN pic.twitter.com/Dx70h834Ie
— IntoTheBlock (@intotheblock) April 11, 2022
Whale Map lists $38,400 as support for the same reason. Therefore, Bitcoin consolidated between $38,000 and $39,000 for a long time. If it doesn’t hold, the area around $37,000 may still offer support, but that already looks much weaker. Below that, bitcoin could potentially drop rapidly.
$BTC in chain update
$41,600 unfortunately not kept
$38,400 is the nearest new on-chain support
$27,000 maximum pain pic.twitter.com/LMNflxT3JL
– whale map (@whale_map) April 11, 2022
Several analysts fear a deeper pullback anyway. They are talking about a potential retest from the low earlier this year around $33,000. Arthur Hayes, former CEO of BitMEX, talked about $30,000 last weekend. So a drop below $30,000, towards $28,000 like last summer, is not out of the question. Below $27,000 would be very bearish according to Whale Maps.
Some analysts believe that bitcoin will consolidate around its current price, but will it be above $40,000 or will it be back between $38,000 and $39,000 earlier this year? In any case, nothing is certain.
$BTC consolidation continues… leverage is under control… float still drying up…
This is not going to last forever. Just put on a Band-Aid and keep pushing. pic.twitter.com/oNJbPeZSgv
— 360Trader (@360_trader) April 11, 2022
Meanwhile, analytics firm Glassnode is reporting a well-known trend that we also saw during previous pullbacks. That is, short-term holders are panic-selling again, while long-term holders seize the moment to accumulate more BTC.
#BTC dynamics of supply and demand
HODLers accumulate at a discount, buying from short-term holders in a panic. pic.twitter.com/VHMGt5Mez2
— (@Ninetropic_) April 11, 2022
The number of bitcoins that hasn’t moved for a year also continues to rise, and that’s usually a bullish sign.
— Quinten Francois (@QuitenFrancois) April 11, 2022
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