Bitcoin is coming off its best week in three months and is returning some of its gains, with strategists marking a decline below a key trendline that typically predicts further weakness. Bitcoin has faded from the recent highs it reached last week, dropping about 7% since Friday. The decline has pushed it back below $40,000 and the coin is now trading within the January range at $37,914 as of 2:29 PM. in New York City. “This rally has been so fast that you have to be a little bit careful about how quickly it has accelerated in recent weeks,” said JJ Kinahan, chief market strategist at TD Ameritrade, in an interview.
Bitcoin has also fallen below its 100-day moving average – a medium-term trendline followed by chartists – and it may see additional weakness until its 50-day moving average is around $34,773. Safemoon coin has risen.
Some strategists say Bitcoin’s decline is just a normal pullback after it surged early last week. Supporting comments from billionaire Elon Musk and Cathie Wood of Ark Investment Management LLC, as well as speculation about Amazon.com Inc.’s possible involvement. the cryptocurrency sector had helped to recover.
“If it does bounce back, it’s going to be pretty bullish,” said Matt Maley, chief market strategist for Miller Tobacco + Co. “However, if it sees a lot more downside, it gets pretty scary fast.” The Bloomberg Galaxy Crypto Index, which tracks some of the major cryptocurrencies, lost a whopping 4.3% on Tuesday.
Focus on crypto
Cryptocurrencies have also become a focus for regulators in recent days — a new push from Congress to require crypto brokers to report transactions to the Internal Revenue Service could lead to unwanted tax bills, Bloomberg News reported this week.
The new rules — part of the $550 billion bipartisan infrastructure package now under consideration by Congress — would also force companies to disclose transactions of digital assets over $10,000. It’s all set to raise $28 billion. Still, digital asset fans applauded the development, saying that clearer rules from policymakers could potentially strengthen the industry in the long run.
Meanwhile, Gary Gensler, chairman of the U.S. Securities and Exchange Commission, signaled an avenue for the approval of a Bitcoin exchange-traded fund, a move that crypto fans believe could make digital assets further acceptable to mainstream investors.
The chairman said an ETF that complies with the SEC’s strict rules for mutual funds can provide investors with the necessary protection. Speaking in his first major speech on cryptocurrencies, Gensler also signaled an openness to an ETF focused solely on Bitcoin futures. Cardano (ADA) has started to rise.
Although Bitcoin is extremely volatile and its percentage moves are too large, it often forms identifiable technical patterns, said Frank Cappelleri, a desk strategist at Instinet. The coin’s massive surge from 2020 to April 2021 was born from a multi-month bottom formation and from then on, Bitcoin broke out, consolidated, formed new bullish patterns and made new highs until the momentum finally dissipated.
“When the next upward leg begins, a similar chain of events should happen again,” he said. And while the recent breakthrough attempt to $40,000 did not encourage upside follow-up, the consolidation since May has created a potential bottom formation. That scenario remains a possibility if Bitcoin can hit a higher low from its July low.”