Bitcoin Violates Key Short-Term Technical Level

Bitcoin Violates Key Short-Term Technical Level

bitcoin level
Bitcoin Violates Key Short-Term Technical Level. Image: Marco Verch / Flickr / CC

Bitcoin broke below the short-term uptrend on Tuesday, with lower support around $50,000, then $42,000, but upside momentum continues to slow as the No. 1 cryptocurrency consolidates below the $60,000 resistance level, Coindesk reported.

Support and resistance represent key predetermined levels of the price where the forces of supply and demand meet. These levels are denoted by multiple touches of price without breaking through the level. In financial markets, prices are driven down by excesses of supply and up by demand. Supply is synonymous with bears and selling. Demand is synonymous with bulls and buying. “When supply and demand are equal, prices move sideways as bulls and bears slug it out for control,” according to StockCharts.

BTC was about 15 percent below its March high on Tuesday after failing to sustain moves above $61,000. It was trading at $54,698 at 4 p.m. EDT on Wednesday.

Resistance around $58,000 could limit short-term recoveries, especially as the longer-term trend continues to slow, CoinDesk has reported.

“Initial support for bitcoin remains near $42,000, far enough below current levels to dictate attention to risk management for long positions,” said Katie Stockton, managing partner of Fairlead Strategies.

Conditions are similar to the second half or later stages of a bull market,  crypto analysts said Monday at Glassnode, where observers detect growing nervousness about falling prices.

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There has been an increase in “wealth transfers” from long-term bitcoin holders to newer speculators, reminiscent of market peaks, according to a Glassnode analysis, Business Insider reported.

Glassnode also said on Tuesday that the biggest players with wallets of 1,000 to 10,000 bitcoins had cut their holdings by 307,000 bitcoins since December.

Falls in big holdings “are often but not always associated with bear markets,” investment manager Timothy Peterson tweeted.