Bitcoin is down about 40% from its November record near $ 69,000, and there’s mounting evidence that this isn’t the worst yet.
The largest cryptocurrency has not gained traction on any recovery attempt in the past few months and is currently dipping into the $ 41,000 region.
Source: TradingView
The most recent declines come minutes after the results of the December Federal Reserve meeting were released, suggesting the potential for earlier and faster than expected rate hikes as well as outflows.
Vijay Ayyar, vice president of corporate and international development at Singapore’s Luno Stock Exchange, said the lack of interest and demand for holidays, tax sales and concerns in the market about possible action by the Fed led to weakness over the past year. He expects levels between $ 38,000 and $ 40,000 to be in the spotlight.
The area that extends from $ 40,600 to $ 43,000 is known as the polarizing “zone of interest,” where past resistance becomes future support, and vice versa. In the past 12 months, Bitcoin has reacted several times in this area. A dip below $ 40,600 would signal continued weakness.
For the past two years, Bitcoin’s decline has found support at the 55-week simple moving average, which is currently around $ 46,000. The bear market between April and June 2021 caused the price to drop 56% and bottom out there. The same thing happened during the Flash crash in early December 2021.
Current volatility has pushed the price below this important moving average.
The head and shoulders pattern may have been triggered after last week’s decline. A similar pattern occurred between February and May 2021, with the price of BTC falling from nearly $ 65,000 to $ 28,800.
Bitcoin has now broken the cut – if selling pressure mounts and polarizing support at $ 40,600 is lost, the measured target suggests a test of $ 26,000 with devaluation at the right shoulder high of about $ 52,200.
Bitcoin has gone through six major fixes over the past decade, including the current one. The depth of the next drop will be less than the previous one, for example the 2021 crash resulted in a 56% drop.
Market participants should be on the lookout for $ 30,000 as prices slipped from record highs near $ 69,000.
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