Bitcoin dropped below $40,000 again over the weekend. Since then, it has been in a downtrend. It isn’t surprising, considering that both of the previous moves to the $40-$44K level had been the same. This time, however, there is a lower momentum. It raises concerns about the potential for the digital asset not to be able to provide any support at all below that level.
No Demand Established
It is quite common to see bitcoin drop below $40K just after it was breached. Because bitcoin is highly volatile, these types of moves can be expected at regular intervals. That is what makes bitcoin such a desirable investment option. These moves can help to confirm if bitcoin has dropped into bear territory after a bullish year.
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The demand is what characterizes the initial stages of any bull rally. Investors absorb the exchange-traded supply, which leaves less for investors to buy. When demand exceeds supply, then a rally or at most a recovery can occur.
Despite this drop in demand, Bitcoin has not been able to generate any significant interest. This is not good news for Bitcoin, as it has failed to establish any significant demand at the moment in one of its most important areas, the local “golden zone”. Bitcoin will continue to deviate from its bullish trend as more BTC is being dumped onto the market.
BTC does not see significant demand. Source: TradingView.com| Source: TradingView.com
Bitcoin’s Need for Momentum
Any digital asset’s growth and value will depend on how much momentum is experienced in any given moment. BTC trades sideways over the last few weeks. This is an indication that there has not been any real momentum in all the recoveries. On longer time frames, however, bearish divergence has taken place.
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The bears are still in control of bitcoin, even though it isn’t completely out the bull zone. According to an analyst, BTC will backtest the monthly 21 EMA again in line with this trend. As this is not a stable trend, a possible breakdown that will see digital assets drop to between $20K and $24K could be a possibility.
BTC price continues to fall despite low momentum | Source: BTCUSD on TradingView.com
Important fact: How much market movement has been from short to longer. Over 97% are net bitcoin long. However, just 2.79% remain short. The long-term outlook is bullish for bitcoin, but the short-term forecast remains bearish.
Featured image by CoinDesk. Chart taken from TradingView.com
