The Key Takeaways
- Bitcoin surged above $100,000 early this week but has tumbled in recent days as investors reassess this year's interest rate outlook.
- The digital asset's price recently formed a bearish engulfing pattern to halt the recent rally.
- Investors should watch key support levels on Bitcoin's chart around $92,000, $87,000, and $74,000, while also monitoring important resistance levels near $100,000 and $106,000.
The Bitcoin (BTCUSD), which surged to $100,000 earlier this week, has fallen in recent days due to investors’ reevaluation of this year’s interest rates outlook.
The cryptocurrency has lost ground as stronger-than-expected economic data has driven up Treasury yields, putting downward pressure on risk-on assets such as bitcoin amid investor concerns that the Federal Reserve may not cut interest rates again.
On Wednesday, the spot Bitcoin ETFs (exchange-traded funds) experienced their second largest daily outflows, since trading began in January. This indicates caution among institutional investors toward this asset class.
Bitcoin’s value has increased by more than twofold over the last year. The cryptocurrency is up about 33% in the time since the November election, amid hopes that a Trump-friendly Congress and an incoming Trump Administration will create a favorable regulatory environment.
Bitcoin traded at $93,500 on Thursday evening, just a little lower than the previous day’s high and far below Monday’s weekly peak of around $103,000. Mid-December saw the highest ever price of Bitcoin, which was around $108,000.
We break down Bitcoin’s technicals and highlight important price levels.
New Year Rally Haltened by Bearish Engulfing Pattern
Bitcoin’s price is under heavy selling pressure since it reached its all-time highest (ATH). Recently, bitcoin’s price has formed a bearish pattern that engulfed it to stop last week’s rise above the $100K mark.
The relative strength indicator (RSI), as well as the respectable 50-day MA, have both fallen below 50. This indicates a weakening of the buying trend.
Look at the Bitcoin chart and identify important support and resistance levels. Investors will be closely monitoring this.
Keep an eye on the Key Support Levels
Around $92,000 is the first level of support to watch. Near the low of the retracement in late November and the trough of December, or the trendline at the bottom of the new channel that may be forming.
The price of the bitcoin could drop to $87,000, where bulls might look to enter the market below a pennant chart which led to the record-breaking move in the currency.
Unanimous closes below this level could lead to a fall of around $74,000. Investors with a longer-term perspective could accumulate cryptocurrency near the 200 day MA, and at prominent price peaks between March and October. A move like this would mean a price correction of about 20%.
Watch for important Resistance Levels
A return of bullish movement could lead to another attempt on the psychological $100,000 mark. This area may offer overhead resistance at a series of recent peaks, and near the descending trendline’s upper line.
A retest at the crucial $106,000 level may be triggered by buying above this level. The traders who bought the last pullback might want to lock in their profits near this level.
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According to the article, as of its date of publication, the author did not hold any of these securities.
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