Bitcoin is approaching support at about $20,500; the options market implies concerns of additional price declines. BTC declined 6% yesterday, approaching levels of support, or the price level that an asset does not fall below for a period of time, at around $20,500. The decline dropped Bitcoin price approximately 36% below its 200-day moving average of $32,000. At the time of writing, BTC is changing hands at $21,138.
BTC/USD 4-hour chart | Source: TradingView
Bitcoin price declines further as momentum wanes
Cryptocurrencies yesterday drifted further away from their recent highs as investors processed the latest spike in macroeconomic uncertainty and braced for aftershocks of the U.S. Federal Reserve’s expected 75 basis point rate hike.
Bitcoin’s downturn is occurring in conjunction with a decrease in its RSI (relative strength index) to 41. RSI is an indicator that measures the speed and magnitude of price movements. Often used as a proxy for momentum (particularly when assets are trending), levels of 70 and above are often interpreted as indicating that an asset (in this case BTC), is overbought. Levels of 30 or below often indicate that an asset is oversold.
Bitcoin was recently trading at about $21,200, off slightly for the past 24 hours, although it was down more than 5% earlier in the day. The largest cryptocurrency by market value was changing hands over $24,000 as recently as last Wednesday amid renewed investor optimism that inflation might have peaked and that the global economy was declining at a reasonable pace. But the rally proved short-lived as BTC returned to the $18,000 to $22,000 range it has occupied since the first part of June, at one point dipping below $21,000.
Ether was recently trading just above $1,440, off less than a percentage point from the previous day but well off its most recent high above $1,600. The second largest crypto by market cap after bitcoin rallied last week on optimism about the Merge, which would shift the Ethereum blockchain from a more energy-intensive proof-of-work model to proof-of-stake, and investors’ increased appetite for risk. A heightened level of options open interest, relative to that of BTC underscored this trend.
📊 As #Ethereum traders await the September proof-of-stake consensus mechanism transition, there are still hints as to where we go between now & then. Negative sentiment & $ETH shifting to exchanges are a couple things to check out in our latest insight! https://t.co/uOF7h58P3X pic.twitter.com/4RramKIVpW
— Santiment (@santimentfeed) July 26, 2022
But ether’s 10% plunge on Monday represented its biggest dip in more than a month as the crypto broke from a six-day trading range of $1,460 to $1,660. Altcoins also traded in negative territory on Tuesday, with Polygon’s MATIC and Chainlink’s LINK plummeting 11% and 9%, respectively.
The overall cryptocurrency market cap stands at $973 trillion, and Bitcoin’s dominance rate is 41.6%.
Read more:
- Bitcoin Might Face Some Serious Problems If Bulls Are Unable To Push The Price Above $22,000
- Bitcoin Price Trades Sideways To Hold Above $23,000; Altcoins Surge