Bitcoin (BTC) makes a deeper one pullback. As bitcoin surged toward $45,000 last week, several analysts warned of a possible pullback. The resistance around USD 45,000 then turned out to be indeed too great and bitcoin then started to decline.
Still, bitcoin already found support around USD 42,000, held strong there and started to recover. However, that apparently was not the end of the pullback after all, as bitcoin made its strongest decline in a month yesterday. As a result, we see a significant increase in fear in the market:
Bitcoin Fear and Greed Index is 30 – Fear
Current price: $40,586 pic.twitter.com/AeJURNxXxZ— Bitcoin Fear and Greed Index (@BitcoinFear) February 18, 2022
Bitcoin price drops by 8.4%
After the bitcoin price The day before yesterday was already struggling to rise above $44,000, the price was already starting to look a bit unstable. Bitcoin briefly dipped to $43,500 on Wednesday afternoon, but was still able to recover. Yesterday morning, however, bitcoin lost traction again at USD 44,000 and the price then started to fall faster and faster.
First, support broke at $43,000 and a few hours later, bitcoin also dropped above $42,000. Even the $41,000 was lost a few hours later. Bitcoin then dipped all the way to $40,300, its lowest price in two weeks and down 8.4% in half a day.
Bitcoin held steady above $40,500 overnight. At the time of writing, bitcoin comes in at $40,850 on Binance and €35,900 on Battle.
BTC decline coincides with 4 factors
The decline is again accompanied by a major liquidation of long positions. The market was again overleveraged. Derivatives traders were apparently a little too bullish when the price started rising recently. A large part of these traders keep on staying in this bull trap fall.
Wow, the highest hourly #Bitcoin long liquidation level ($23M) since Jan 24th pic.twitter.com/KvDQEY7JqE
— On-Chain College (@OnChainCollege) February 17, 2022
The decline is also accompanied by ever-rising tensions between Ukraine and Russia. The situation is causing a lot of uncertainty in the financial markets. The stock markets are also generally turning red and this panic is spreading to the crypto market.
Concerns about the interest rate hikes by the Federal Reserve in March are also keeping the markets in check. More volatility is expected in the stock markets, especially with regard to riskier assets to which bitcoin has a high correlation. Gold, on the other hand, is rising.
Bitcoin mining difficulty all-time high
Finally, perhaps the miners for sales pressure. In yesterday morning’s market update, we already reported that the so-called mining difficulty was about to rise. Shortly thereafter, this difficulty increased by a whopping 4.78% to 27.97T at an average hash rate of 200 flashes per second (EH/s). This 27.97T is a all-time high† However, that may have contributed to the reason why some miners sold some of their stocks as mining is less profitable at a higher difficulty.
Analysts remain bullish in the long term
Currently, the big question is whether this $40,000 was the bottom of this correction. Bitcoin may be about to recapture $41,000 and then $42,000. However, it is also possible that we will see another dip to $38,000 first. There should be a lot of support there. Yet there are also bears which are even seeing a retest of the $33,000 low yet again.
$ BTC is approaching a key level of support.
Using IntoTheBlock’s IOMAP indicator, we can identify that some support can be expected between $40.8k and $42k, where 272k BTC was acquired by 787k addresses. If this level fails to hold, Bitcoin could revisit the $38k lows. pic.twitter.com/zMFCNEcuWB
— IntoTheBlock (@intotheblock) February 17, 2022
While analysts are clearly turning more cautious in the near term, they are still very much bullish over the long term. The on-chain data supports that attitude:
#Bitcoin continues to increasingly being hodld. The percentage of coins last moved within the last 6 months has been declining since mid-2021. That of the coins moved within the last 3 months is also declining again after an increase in Q4 2021. $ BTC 💎🤝 pic.twitter.com/UshPy5cvSB
– Jan Wüstenfeld (@JanWues) February 17, 2022
Bitcoin $ BTC – major highs and length to exceed them
Cheerleaders who constantly beat the drums of “to the moon” are doing a huge disservice to $ BTC investors
Corrections can be lengthy
Long endurance, not constant hype, should be the message pic.twitter.com/sFonm3W4hp— Peter Brandt (@PeterLBrandt) February 18, 2022
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