After yesterday’s 14% plunge, bitcoin (BTC) clawed back to around $40,000 during Asian trading hours on Thursday, but still remained under pressure.
Sharp price swings have become the norm this week as the broader uptrend weakens in a way that is similar to what happened to bitcoin in 2018 at the start of a bear market.
- Bitcoin faces resistance at around $45,000, defined by the 50-period volume weighted moving average on the four-hour chart.
- The relative strength index (RSI) remains oversold on the four-hour chart, although buyers are on the sideline as volatility rises.
- Bitcoin is stabilizing around the 200-day moving average. A decisive break below $40,000 would signal a trend shift from bullish to bearish.
- Lower support is seen at around $27,000, which is a roughly 60% retracement of the March 2020 low.
- “$27,000 may be a more realistic gauge of support given the lack of oversold buy signals, which is probably a function of how fast the pullback unfolded,” Katie Stockton, managing partner of Fairlead Strategies, said in an interview with CoinDesk.
Sharp drawdowns of about 40% are common toward the end of a bull market, similar to 2017 and 2018.
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