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Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected
BTC is down about 37% month to date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.
Updated Mar 6, 2023, 3:15 p.m. Published May 28, 2021, 11:28 a.m.
Bitcoin (BTC) failed to sustain moves above $40,000 resistance on Thursday as the broader uptrend weakens. The cryptocurrency was trading around $36,000 at the time of writing and upside appears limited into the weekend.
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A bearish trend reversal is on watch after months of slowing momentum, consolidation and a downside break below $50,000 and $40,000. Bitcoin is down about 37% month to date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.
- The relative strength index (RSI) on the daily chart has been oversold over the past week as price held support around $30,000. However, the RSI is not yet oversold on the weekly chart which suggests price upside should remain limited around $40,000.
- Bitcoin is below the 100-day and 200-day moving averages. This indicates the corrective phase that began earlier this month remains in effect.
- On intraday charts, bitcoin failed to hold support. Further downside towards $33,000 could encourage short-term buyers and stabilize the current decline.
Despite signs of a broader trend reversal, there are still short-term opportunities for active traders. “BTC can be very volatile, especially compared to assets in traditional markets,” wrote Justin Chuh, senior trader at Wave Financial, in an email to CoinDesk.
“No one is borrowing to short spot BTC, we sill have an upward sloping forward curve, and downside protection remains relatively light,” said Chuh, who added that support will need to hold above $30,000, or otherwise bitcoin would be down on the year.
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