Despite minimal spot trading throughout the weekend, bitcoin led the cryptocurrency market’s modest recovery after last week’s sell-off. The opinion of a technical analyst, there is a restriction of Bitcoin’s upside potential as long-term technical indications have turned bearish.
After last week’s broad market catastrophe, which saw the No. 1 cryptocurrency by market capitalization plummeting around $40,000 from about $48,000, Bitcoin moved beyond the $42,000 milestone over the weekend. Ether and most of the top 20 altcoins by market cap were up despite a week of steep drops.
The publication of the Federal Reserve’s December meeting minutes caused a drop in Bitcoin and other cryptocurrencies. The Fed forshadowed a more rapid tightening of monetary policy than had previously been predicted.
On Saturday, the leading cryptocurrency fell to $40,505.3 on Coinbase, its lowest level since September 21, before rising above $42,000.
The recovery in Bitcoin spot trading volume on large centralized exchanges may not be sustainable, according to CoinDesk data. (Bitcoin’s price fell to below $41,900 at the time of this writing.)
Before the Fed minutes, Bitcoin had plummeted six days before.
The minutes revealed a significant hawkish bias, according to QCP Capital, a Singapore-based crypto quant trading firm. They expect Central banks’ tightening to cap BTC and ETH’s all-time highs for most 2022.
The price of Bitcoin (BTC) has been falling for the past two months, with each new high being lower than the previous one.
Cryptocurrency prices have fallen by nearly 9% in the last seven days, as the upward trend has slowed.
It’s possible that the current retreat will find some support near $40,000 if it breaks it. However, the $45,000 barrier appears to be the upper limit of the market’s potential gains. This means that if the price rises, buyers will be able to swiftly cash in on their gains.
Since December 11, the RSI on the daily chart has been the most oversold, albeit in the context of a price decline.
After failing to hold the $38,000-$40,000 support zone over the weekend, Bitcoin is vulnerable to more selling in the long term. There is no overselling of the RSI yet on the weekly chart, indicating that the downtrend is still intact.
Around $28,000 is the next level of support, which is close to the low of June 2021.
Two weeks from now people expect BTC to report an exhaustion signal, which is often followed by a price rebound. In spite of this, the daily chart has shown similar oversold readings as buyers remain on the sidelines.
