Bitcoin, the king of the cryptocurrency, has fallen below price support after a critical development in environmental issues for the Environmental Protection Agency and other factors.
Bitcoin is now worth $38832.74 as of this writing.
Now, many Bitcoin experts are concerned that the price of Bitcoin may drop further as it struggles to hold onto the $38,000 price level.
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The reason for taking profits for the decline of Bitcoin
What’s more, profit taking may have some impact on the reason for Bitcoin’s effort to breach the $40,000 mark. The $38000 level could also continue to be supported by the bearish buying sentiment.
Santiment, a data feed of cryptocurrency for investors, has tracked an increase in profit transactions in bitcoin. The count has increased rapidly over the past two weeks which are all categorized as sold.
However, the market price of BTC may not recover quickly unless traders put a sell-off.
Bitcoin has traded at less than $40,000 over the past week. Low volumes can be disheartening for cryptocurrency traders and investors.
BTC total market cap at $731.71 billion on the daily chart | Source: TradingView.com
In addition, Bitcoin also suffered a massive drop on Sunday but recovered the next day. Therefore, in the last 24 hours, the price went up and rebounded again by 2.7%.
ZebPay analysts said that the main currency slipped at $38,750 with the 61.8% Fibonacci retracement level, thus falling to $37,386.
Bitcoin has had a lot of support around $37,300 which has already happened in the past, so it is psychologically adjusting and showing the same trend.
RSI shows positive divergence
As the cryptocurrency RSI hits the long-term trend line, BTC was rejected three times. In order to improve the BTC market price, the trend line must be broken. Technically Bitcoin formed this falling wedge pattern but fortunately the RSI showed a positive divergence.
Bitcoin has fallen more than 20% over the past month. Now, movements of this kind can trigger sudden influxes in the futures market which also lead to massive drops in open interest.
The problem is that open interest does not decrease significantly as the current downtrend occurs. It’s still a bit higher compared to March 2022 when the relatively most popular cryptocurrency was trading at the same prices.
Therefore, if the price is able to close and continue above the wedge resistance line, an increase to $41,000 to $41.5K is expected.
However, a close or a break below the support level would be an additional drop for Bitcoin and the price could also drop to the $37,000-$35K levels.
If the price breaks at these levels, expect massive liquidity and a fall in prices, given the rise in open interest in contrast to the market value.
Now, the $37,000 level is a critical area to watch for in the next couple of days, as it can have a huge impact on the market’s direction in the short term.
Featured image from Pixabay, chart from TradingView.com