Bitcoin fell below $50,000, which some analysts consider crucial for assessing the biggest cryptocurrency’s outlook going into 2022.
On Tuesday, the token lost as much as 4.5% and was trading at around $49,300 in New York as of 8:40 AM. The Bloomberg Galaxy Crypto Index and Ether, which is the second-largest cryptocurrency, were also in red. Each fell more than 3%. According to CoinGecko, smaller tokens like Solana and Polkadot, as well as the meme token Dogecoin, lost ground on Tuesday.
Investors have been withdrawing from the most speculative parts of global markets in recent months, fearful that a waning tide of central bank stimulus might spell trouble. The subject of heated debate is how exposed Bitcoin and other cryptocurrencies are to this risk.
Vijay Ayyar (Vice President of Corporate Development and International at the crypto exchange Luno, Singapore) stated that Bitcoin is not “anything worrying at present.” He said that the prospects for digital coins remain “bullish” provided that $48,000 to $49,000 is maintained.
Bitcoin has been moving in tandem with more risky assets, such as U.S stocks, this year. However, this pattern appears to be deteriorating this month. Bitcoin is down more than 10%, but the S&P 500 index of large companies has risen by 5%. Their performances diverge for the first time since June.
According to technical studies, Bitcoin may be at a tipping point after a fall from an all-time high in November of nearly $69,000. This has reduced its year-to-date advance to around 70%.
Bollinger bands, a popular method of assessing volatility, was used to study virtual currency. It touched the upper band during the week but did not close above it. Some believe that Bitcoin could have difficulty making short-term gains.
Fairlead Strategies founder and managing partner Katie Stockton says that Bitcoin’s next level support will be around $44,200 based on a Fibonacci level.
She said that the $50,000 level was not as significant in her opinion, but it did have psychological significance. “Bitcoin appears to be in a consolidation phase and is responding to the short-term overbought situation.”
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