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Bitcoin faces decline amid technical and fundamental pressures

Bitcoin faces decline amid technical and fundamental pressures A representation of virtual currency Bitcoin is seen in front of a stock graph in this illustration taken January 8, 2021. (Reuters)
By Newsroom
Jun 24, 2024 2:37 PM

In a blow to cryptocurrency bulls, Bitcoin (BTC), the world’s leading digital currency, has seen a significant price drop. After flirting with $72,000 twice in May and June, Bitcoin reversed course, forming a bearish double-top pattern. This technical indicator often precedes a price decline. The critical support level of $66,000 failed to hold on June 18, leading to a further acceleration of the sell-off.

Bitcoin started the new week near $62,600 levels. Its current prices are approximately 15% below the peak of $73,800 observed in March this year.

Analysts note that the 22-day, 50-day, and 100-day moving averages for Bitcoin are in the $66,000-$67,000 range. They highlight that buying interest in early June has turned “neutral” and suggest that breaking the resistance levels at $64,000-$65,000 could signal a move toward a safer zone.

Bitcoin 2024 outlook, targets, expectations

Analysts warn that following the double top formation after reaching $72,000, Bitcoin could potentially retreat to $60,000. However, even current price movements below significant moving averages indicate overselling. Therefore, these levels might be seen as opportunities for long-term investors. The $58,000-$60,000 range is crucial as it aligns with the 200-day moving average, representing a critical support zone that should not be broken downward.

Why is Bitcoin retreating?

The decline in Bitcoin is attributed not only to the technical double top formation but also to fundamental factors supporting this price action:

  1. The resilience of the Dollar Index above 105 supports a “strong dollar” outlook, exerting selling pressure on cryptocurrencies as risky assets.
  2. The correlated movement between the U.S. tech index Nasdaq and Bitcoin is noteworthy. Last week, Nasdaq retreated by approximately 1.4% from its peak of 17,936, while NVIDIA, testing above $140, dropped to $126.57, dragging Bitcoin down.
  3. Following this year’s halving process (halving of rewards), miners continue to experience reduced incomes, with daily earnings declining from $50 million to $30 million. As cooling costs rise in the summer, miner selling has increased, contributing to Bitcoin’s price decline.
Last Updated:  Jun 24, 2024 2:38 PM