Bitcoin price fell below $40,000 briefly in early hours before it moved back above $42,000

Most cryptocurrencies are falling, although selling pressure seems to be slowing down from last week. Bitcoin price has fallen about 9% over the past seven days, having just recovered slightly above $42,000 after falling below $40,000 for the first time since September. At the time of writing, BTC is changing hands at $42,316.

bitcoin-price-fell-below-40000-briefly-in-early-hours-before-it-moved-back-above-42000

BTC/USD 4-hour chart | Source: TradingView

Bitcoin price briefly reached its lowest level in five months this Monday at $39,650

Bitcoin fell again on Monday during U.S. trading hours after a small recovery over the weekend. It fell below $40,000 briefly in the early hours before it moved back above $42,000. The bearish price move came after U.S. stock market losses deepened as investors brace for actions from a more hawkish Federal Reserve (Fed). Last week, prices of the oldest cryptocurrency fell for six straight days after Fed minutes revealed policymakers had discussed aggressive interest rate hikes alongside a faster pace to normalize its balance sheet.

“Bitcoin isn’t getting a ton of utility to kick off January, & it’s noticeable in mild declines for $BTC circulation (unique daily tokens moved) & active addresses (addresses transacting on the network). Look for an uptick as a foreshadow of the turnaround”, Santiment stated.

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Source: Santiment

The selling pressure is starting to wane after last week’s price drop. The cryptocurrency is holding short-term support at around $40,000, although gains appear to be capped near $43,000 – $45,000.

The Relative Strength Index (RSI) is rising from oversold levels on the four-hour chart, which typically precedes a brief price bounce. On the daily chart, the RSI is the most oversold since December 10. Upside momentum has weakened given BTC’s two-month-long downtrend. This means sellers could remain active around resistance levels.

Following Bitcoin, most of the major cryptocurrencies were also red on Monday. Ether plummeted below $3,000 at one point before it returned above $3,000. The underperformance of altcoins suggests traders are still being cautious. Altcoins tend to decline more than BTC during market downturns due to their higher risk profile.

In another development, major whale transactions aren’t quite coming at their frequency in October or November. Our metrics indicate that the BTC network is getting around 13k transactions per day that exceed $100k in value. ETH’s network is seeing about 9k per day.

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Source: Santiment

The overall cryptocurrency market cap stands at $1.954 trillion, and Bitcoin Dominance is 40.8%.

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