Although Bitcoin may have seen better days, that doesn’t mean it is not a viable option. However, the downtrend that has swept the cryptocurrency into a bearish trend is now halfway through the next halving. This could mean that it is likely that it will be heading to another extended bear. The digital asset’s performance lately suggests that this may be the case. This is combined with the current investor sentiment, and it’s a recipe for disaster.
Fearful Market
The Fear & Greed Index always helps give an idea of how investors are feeling towards the market. The Fear & Greed Index is an excellent tool. It aggregates data from many metrics, and delivers a scale of numbers. With the decline in crypto markets, the scale has been negative. But, the situation has worsened as it now shows extreme fear among investors.
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It is normal for cryptocurrencies to dump so quickly. While top coins like Ethereum and bitcoin had been dropping steadily, there was a total of about $200 billion in market losses.
BTC drops to $38k | Source: BTCUSD on TradingView.com
Bitcoin has now lost the $40,000 spot that it had previously claimed. This resistance level remains strong, with continued sell-offs by bears causing bitcoin to drop from this point. Bitcoin could retest $35,000 if investor sentiment remains negative and there is no new money in the market.
Bitcoin Is Bearish
Bitcoin has been very bearish in the short-term. A look at the indicators shows that the cryptocurrency’s price has dumped below its 50-day moving average. It is crucial to maintain a level above this for a digital asset such as bitcoin in case there is a rebound.
The price of the currency has fallen below its five-day moving average. This means the coin will be trading at around $38,000 and less within the next few days.
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Next support is at $37.721. Although this is not a strong support level historically, it may hold if bears ease off a little with selling. The $37,000 level is likely to be bitcoin’s next support level. Bulls can now prepare for resistance by having a better hold.
The market must expect strong resistance to bitcoin’s attempt to breach $40,000 once again. A break of $40,000 will be difficult given the lack of money in the market and traders/investors being cautious about putting more money in, so it is unlikely that this happens before May.
Featured Image from JournalTime. Chart by TradingView.com