In a completely unexpected move, Bitcoin’s proposed breakout turned lackluster. The world’s leading cryptocurrency by market volume fell below the $40,000 price point and has barely managed to regain it. Currently trading at around $40,100, Bitcoin has been struggling to close the $40K point for days.
On-chain metrics suggest lowered demand from new investors and long-term holders being in the limelight. With the prices going up after a long dormant period, it was great to see Bitcoin back to where it belongs. However, the optimistic projections have quieted down since then, so the market entered a reversal instead of continuing to conquer new price levels.
What’s the Reason Behind It?
The Fear & Greed index is pointing in the extreme fear zone at the moment. It’s clear that the sentiment surrounding Bitcoin and cryptos is not exactly positive right now. Experts are not sure what the reason is, especially since the Bitcoin Conference in Miami just ended last week. It was supposed to give new investors wings by taking the price up, yet it did nothing at all. As a matter of fact, it may have had a negative impact.
An early attempt to break past the $40,000 price point was met with big resistance at $40,650. The price went down at $39,600 before it regained ground at just over $40,000. Bitcoin is having a hard time to keep its feet in the $40,000 zone for a few straight days, and that’s not a positive signal.
Many experts believe that the current price is a retest of major support and resistance levels. The same thing happened in 2020, and as history likes to repeat itself, many analysts believe a lackluster recovery is to follow. Bitcoin’s on-chain behavior was discussed in recent weeks among many experts, noticing a moderate volume of profit taking by investors. While the volume isn’t historically extreme, it surely is one of the reasons for the dwindling prices.
Who can really tell? Some price correction is surely coming soon, with most analysts believing it’ll sway back and forth and settle into the current zone in the following week or weeks. In the long-term, though, there’s a strong bullish narrative that may come forth with a mega price pump. No one is sure when that would happen, but it should arrive sometime by the end of the year.
The current global socio-economic happenings are not giving Bitcoin a lot of room to breathe. If you take a look at the 2021 RSI, Bitcoin’s correction is almost a lock. A strong bullish move may be coming soon, and if Bitcoin managed to hold its ground, that pump we mentioned may not be that far off.
After a lackluster closing of the past year, 2022 is touted as the next big year of cryptos. Bitcoin will lead the charge in that case, of course, but Ethereum and some memecoins are poised for a breakout too. The year may not have started in the best possible way, but if a price pump takes Bitcoin’s price up as expected, things can quickly change.