Bitcoin has seen some better days but that does not mean that the cryptocurrency is no longer a viable choice. The thing is that the recent downtrend has set it on a bearish path and with the market halfway to the next halving, it could very well be that the market is headed into another stretched-out bear. This is certainly the case for the short term given how the digital asset has been performing lately. Coupled with current investor sentiment and it is a recipe for disaster.
Market Turns Fearful
The Fear & Greed Index always helps give an idea of how investors are feeling towards the market. It is a helpful tool that aggregates data across a number of metrics and then delivers on a numbered scale. The scale has since been in the negative with the downtrend in the crypto market. However, it has gone from bad to worse as the index now reads extreme fear in terms of investor sentiment.
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This is expected when cryptocurrencies dump in such a short amount of time. The market had seen about $200 billion shaved off in the space of a day while top coins like bitcoin and Ethereum had dumped continuously.
BTC down to $38k | Source: BTCUSD on TradingView.com
Bitcoin which had earlier reclaimed the $40,000 spot has once again lost it. It remains a strong resistance point with bears continuing sell-off trends causing the digital asset to fall from this point. If investor sentiment continues to be negative and no new money comes into the market, then bitcoin may very well retest the $35,000 before the weekend is over.
Bitcoin Is Bearish
In the short term, bitcoin has turned very bearish. A look at the indicators shows that the cryptocurrency’s price has dumped below its 50-day moving average. For a digital asset like bitcoin, it is important to stay above this level if there is to be a recovery in the short term.
It has also dumped below the 5-day moving average which means that the cryptocurrency is set to be trading just around $38,000 or less in the next couple of days.
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The next support level also happens to lie at $37,721. Not a historically strong support level for the digital asset but if the bears were to let up a bit with their selling, then it could definitely hold. However, more likely the next support level that bitcoin stops at will be that of $37,000. Here, bulls have a stronger hold and can prepare for the next resistance.
Furthermore, the market should expect significant resistance if bitcoin does try to break above $40,000 again. With less money into the market, and investors/traders being warier of putting in new money, a break above $40,000 is only likely in May.
Featured image from JournalTime, chart from TradingView.com