June 12, 2021
  • June 12, 2021

Price remains vulnerable despite recent rebound

By on May 28, 2021 0

Bitcoin (BTC) Talking Points:

  • Bitcoin seems to put a tough month in the rearview mirror, with nearly half of its value wiped out
  • BTC consolidating in narrow range, significant breakout in both directions may be imminent
  • A break above $ 40,000 puts $ 42,000 on the line, while $ 37,000 remains on the downside

Bitcoin continues to be under downward pressure despite fears of a continuing rout appearing to be dissipating. Forced liquidations reached $ 4 billion May 19e during the rout according to Bloomberg Intelligence, leaving investors with a lot of scar tissue after the recent pullback. Despite the upheaval, Bitcoin appears to have found a foothold, as the currency briefly traded as high as $ 40,000.

Despite the recent rebound, investors should remain wary given the volatility associated with digital assets. Bitcoin appeared to be struggling to materially break above the $ 40,700 level following the recent pullback, which is the January 2021 high. Failure to break above this key level may put further downward pressure on the market. vulnerable asset and may see key Bitcoin test levels below $ 37,000 and $ 32,000 respectively.

BTC / USD daily chart

Chart created with TradingView

Using a Fibonacci retracement from May 10th high to May 19th low, we can observe that Bitcoin is stuck consolidating in a narrow range. BTC remains between the 0.236- $ 37,000 level and the 0.382 Fib level at $ 41,265. Before testing the 0.382 Fib level, Bitcoin will need to break through the psychological barrier at $ 40,000, an area in which it has failed several times over the past few days. Continued failure at $ 40,000 could put $ 37,000 or less into play in the next few days. Any other significant downward movement could again lead to a large number of forced sell-offs, which helped accelerate the decline seen in recent sessions.

2 hour BTC / USD chart

Bitcoin (BTC) Analysis: Price Remains Vulnerable Despite Recent Bounce

Chart created with TradingView

Investors will also need to keep an eye out for any further scrutiny from Beijing regarding mining practices across mainland China. Authorities recently cracked down on mining efforts with stiff penalties for those involved in mining digital currencies. Further crackdowns in China will threaten any positive Bitcoin dynamics, as the country accounts for nearly 65% ​​of global mining. Beijing’s distaste for digital currencies is nothing new, as China banned local crypto exchanges in 2017. Any development of new crackdowns on mining practices poses significant risk (s) down for the crypto space, and is definitely something to watch in the short term. .

— Written by Brendan Fagan, Intern for DailyFX

Contact Brendan, use the comments section below or @BrendanFaganFX on Twitter

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