Bitcoin price failed to start a rally today. It started the day with a short-term downward spiral that led its price towards $41,000. But then it changed course. At the close of trading on the US stock market, it was on its way to where it started the day, above $42,000. At press time, the largest cryptocurrency by market capitalization is trading above $42,422, up slightly on the day.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price appears oversold into the Asia trading day, but upside remains limited
Bitcoin has been stuck in a range between $40,500 and about $44,500, waiting for bulls or bears to push it above or below support or resistance.
Throughout January, BTC consolidated between $40,500 and $44,200. As this range gets tighter, a bullish or bearish move becomes more and more likely. This consolidation pushed BTC into a lull and created a battle between the bulls and the bears over the market’s direction.
Bitcoin briefly dropped past the $40,000 range, as featured above, and it is unclear if investors and traders will be able to push back if it breaks through the support again.
Current general sentiment suggests a more likely downside as investors move out of riskier assets, such as tech stocks and cryptocurrencies, and back into cash. Uncertainty could return to upcoming rate hikes from the Federal Reserve, historically associated with bear markets. If enough leveraged long positions are stacked near $40,500 and bitcoin breaks below that level, it could trigger a cascade of stop-loss orders, triggering a price cascade and bar event—a deeper account.
On the other hand, if the bulls hold the line above $40,500, an opposite swing is possible, forcing short positions to buy.
“In the midst of Bitcoin’s 10-week price retrace, its ratio of supply on exchanges has dropped to its lowest level since November 2018. Traders moving BTC to cold wallets continues, and this milestone points to less risk of continued major selloffs”, Santiment stated.
Source: Santiment
Investors should expect bitcoin to remain in a tight range and to continue testing the $40,000 support and $44,500 resistance levels until broader markets pressures occur. By extension, Ether and other altcoins trading at more volatile percentages in line with bitcoin’s movements should be expected. Thursday’s initial jobless claims report may be the catalyst to push bitcoin below support or past resistance.
The overall cryptocurrency market cap stands at $2.007 trillion, and Bitcoin Dominance is 40%.
Sign up for a Binance account here (Discount 10% trading fees): https://accounts.binance.com/en/register?ref=29171587
Read more:
- There Is A Resurgence Of 10 New Bitcoin Whale Addresses That Hold More 10,000 BTC In Last Three Months
- Invesco Strategist Paul Jackson Has Warned That The Bitcoin Price Could Drop Below $30,000