Bitcoin (BTC) continued to plummet yesterday. The course made a bearish trend reversal and dipped even deeper than the bulls had hoped for. Market fears are on the rise again and opinions are strongly divided as to whether this was the worst.
Bitcoin price drops by 5%
From bitcoin price already plummeted last week and started its decline again 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 hold, nor 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 crypto exchanges, the price even touched $39,200. That is the lowest price for bitcoin in a month, and the rally of the past few weeks has all but been wiped out.
Overnight the $39,450 held and early this morning bitcoin started to rise again. Bitcoin comes in at $40,200 at the time of writing KuCoin and €37,000 on Battle† This means that the share price is down 4.9% today and 13.8% down compared to a week ago.
Fear strongly back on bitcoin market
Bitcoin Fear and Greed Index is 20 — Extreme Fear
Current price: $39,666 pic.twitter.com/ZCmcGKxiRM— Bitcoin Fear and Greed Index (@BitcoinFear) April 12, 2022
Bitcoin’s current decline started 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 financial markets, especially in the riskier stock markets with which bitcoin has a high correlation. Stock markets such as the S&P 500 also turned red yesterday.
The market is currently wondering whether the Fed will crash the stock markets before turning the printer back on or will it be the other way around? It could get very exciting about this in the coming months.
The decline of bitcoin is accompanied by a rising dollar index (DXY) price. Analysts were convinced that DXY had now peaked and 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 will be released later today. However, the US government has already warned that the consumer price index (CPI) could turn out very high. That could add even more fear and volatility to the markets.
What can the bitcoin price do now?
It remains to be seen whether bitcoin has finally reached a bottom. Analysts are currently very divided on this. Some analysts are still very bullish and see this as a fairly standard correction. In their view, despite the pullback, bitcoin still has a higher low established and the price has moved to a higher range from a month ago.
The $33k-$46k zone has morphed into $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 fall further, according to analysis company InTheBlock, a lot of support is now around $39,000, as a large amount was bought there:
$ BTC support
Buying activity has been concentrated around the $39,000 level, where 483k BTC was previously acquired, making this the price to watch out for.https://t.co/5B1QuAzPqN pic.twitter.com/Dx70h834Ie
— IntoTheBlock (@intotheblock) April 11, 2022
Whale Map lists the $38,400 as support for the same reason. Bitcoin therefore consolidated between $38,000 and $39,000 for a long time. Should it not hold, the area around USD 37,000 may still offer support, but that is already looking a lot weaker. Below that, bitcoin could potentially fall quickly.
$ BTC on-chain update
$41,600 unfortunately did not hold
$38,400 is the new closest on-chain support
$27,000 max pain pic.twitter.com/LMNflxT3JL
— whalemap (@whale_map) April 11, 2022
Several analysts fear a deeper pullback anyway. They are talking about a possible retest from early this year’s low of around $33,000. Arthur Hayes, former CEO of BitMEX, talked about $30,000 last weekend. A dip below $30,000, towards $28,000 as last summer, is therefore 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 back between the $38,000 and $39,000 as early this year? In any case, nothing is certain.
$ BTC consolidation continues… leverage is in control… float still drying up…
This ain’t gonna last forever. Just slap a band-aid on and keep pushin. pic.twitter.com/oNJbPeZSgv
— 360Trader (@360_trader) April 11, 2022
Analysis firm Glassnode, meanwhile, reports on a well-known trend that we also saw playing out during the previous few pullbacks. That is, short term holders are selling out of panic again while long term holders are using the moment to accumulate more BTC.
#BTC supply and demand dynamics
HODLers accumulate at a discount, buying off panicking short-term holders. pic.twitter.com/VHMGt5Mez2
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Ninetropic_) April 11, 2022
The number of bitcoin that hasn’t moved in over a year also keeps rising, which is usually a bullish sign.
The amount of #Bitcoin that has not moved for 12 months or more has now equalled its all-time high of 64% pic.twitter.com/EYScMZYsgz
— Quinten Francois (@QuitenFrancois) April 11, 2022
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