For the first time since July 4, bitcoin fell below $19,000. After spending the last few days of August and the first few days of September stabilizing in a narrow range around $20,000, Bitcoin has fallen outright, deepening its decline to a low of $18,540 for now.
At the time of writing, BTC/USD is down 6% over 24 hours and 7.15% over a week, and remains near its recent lows, not ruling out further losses.
As for the fundamental reasons for this weakness in the Bitcoin price, it should be noted that there are many factors at play.
- The prospect of the ECB raising rates by 0.75% tomorrow, or the recent assurances from the Fed that it will continue to aggressively tighten monetary policy.
- Investors seem to be dumping bitcoin for a number of reasons.
- the sell-off in the asset is closely correlated to the U.S. stock market: stocks fell today after a volatile trading session, in part due to fears that the Federal Reserve will continue to raise interest rates.
Recall that monetary tightening, by increasing the return on risk-free investments and raising the cost of money, is causing investors to move away from risky assets, a category that BTC is obviously in.
Another factor that weighed heavily on the overall market risk appetite this week was Russia’s shutdown of the Nord Stream 1 pipeline, halting gas deliveries to Europe, which takes the European energy crisis to a new level.
US equities, which are currently falling and have been highly correlated to Bitcoin in recent months, are also playing a role in the fall of BTC/USD since yesterday.
It is also interesting to note that Bitcoin’s dominance rate reached a 4-year low yesterday, which clearly does not argue for the cryptocurrency’s rise.
Bitcoin, technical support near $16990
Now that Bitcoin has broken below the $20,000 threshold, the question arises as to how far the fall can continue.
Bitcoin (BTC/USD) extended its recent decline earlier in the Asian session as the pair continued to trade around the 19742.48 area, which represents the 78.6% retracement of the 19513.74 to 20582.64 appreciation range.
Selling pressure intensified near the 20028.21 area, representing a test of the 50% retracement of the 19540.14 to 20489 appreciation range. Some stops were chosen below the 78.6% retracement of the 19588.27 to 20060 appreciation range.
BTC/USD is down 18% from its August market valuation and has given up about 81% so far in 2022. Traders were unable to briefly hold BTC/USD above the 24558.33 level in August, an area representing 50% of the 31549.21 to 17567.45 depreciation. Following the recent selling pressure, other important technical downside areas include the 16990.14, 14500.15 and 10432.73 zones.
Traders observed a bearish 50 SMA (4 hours), indicating a decline below the 100 SMA (4 hours) and 200 SMA (4 hours). In addition, the 50-day SMA (hourly) is bearish, indicating a decline below the 100-day SMA (hourly) and the 200-day SMA (hourly).
The technical support level should be near 16990.14/ 14500.15/ 10432.73, and the stop loss level should be below it.
The technical resistance level should be near 25256.96/ 27455.20/ 32383.96, and the stop loss level should be above.