Bitcoin Dropped Below $40,000 For The First Time Since Last September. What Is The Reason?

On January 10, Bitcoin dipped below $40,000 for the first time since last September.

Since the beginning of the year, Bitcoin has lost nearly 12% of its value. On Monday at around 4.10 pm CET, the BTC price was down 3.3% to around $40,900, half an hour after hitting a low since September at $39,663.18.

BTC rebounded on January 10 after forming a lengthy lower wick. Wicks are frequently seen as indicators of buying pressure. This wick formed just at the $41,000 horizontal level, confirming it as support once more. Since August 2021, this support level has been in place. The price must continue to trade above this level in order for a bullish BTC structure to remain intact.

Although technical indicators remain negative, the RSI has risen over 30. While readings below 50 are still considered bearish, a climb over 30 is a somewhat positive indication.

Bitcoin’s price has fallen due to investors’ concerns about the Federal Reserve tightening monetary policy. “The Fed’s intention to reduce the balance sheet in Q1 2022 is the primary cause of this sell-off,” Fundstrat strategists said in a note.

Some investors believe Bitcoin’s limited supply, which is due to the algorithm that controls its creation, makes it a safe place against inflation, a type of digital gold that would become less appealing if the FED intervenes.

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