Bitcoin (BTC) Extends Losses, $37K Likely The Next Support Level
Bitcoin (BTC) extended its losses on Monday, falling further into a trading range it has stuck to for most of the year. Analysts expect the token to deepen its losses, given that pressure from inflation and a hawkish Federal Reserve is set to increase in the coming months.
BTC fell 1% in the past 24 hours, hitting a three-week low of $41,897.15. The token has now almost entirely negated its strong rally through end-March, which saw it hit 2022 highs of near $48,000.
A bulk of the token’s recent weakness has coincided with losses in other risk driven assets. Stocks and foreign exchange were also routed as investors feared interest rate hikes by the Fed, which will reduce the margins on investing in several asset classes.
BTC to find support at $37k
BTC’s fall below $42,000 also saw it briefly slip below its 200-day moving average, a sign that the token could be headed for steeper losses below $40,000.
Crypto analyst @SmartContracter expects the token to drop to as low as $37-$38,000, its next key support level. While it could see a brief relief bounce in the near-term, the momentum for the world’s largest cryptocurrency appears to be largely downwards.
Recent data also showed that a large number of long positions on BTC had been liquidated last week. Traders initially expecting more gains in the token may now see a change in sentiment, given recent losses.
More headwinds to come?
Between rising inflation, growing correlation with stocks, and an ongoing halving, BTC faces a slew of factors pushing its price lower.
BitMEX CEO Arthur Hayes said BTC’s correlation with U.S. technology stocks, particularly the Nasdaq 100 index, is likely to see it slump to $30,000 by June. He cited increasing inflation and pressure from the Fed as the two main triggers for a potential crypto crash.
BTC is also set to undergo a halving, ie a reduction in mining incentives, later in the day. While the halving is a method to keep BTC sustainable in the long-term, it comes with the short-term effect of weighing on prices.
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