Bitcoin Remains in Corrective Phase Below $40K; Further Downside Expected

BTC is down about 37% month to date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.

May 28, 2021 at 11:28 a.m. UTC
Updated Sep 14, 2021 at 1:03 p.m. UTC

Bitcoin (BTC) failed to sustain moves above $40,000 resistance on Thursday as the broader uptrend weakens. The cryptocurrency was trading around $36,000 at the time of writing and upside appears limited into the weekend.

A bearish trend reversal is on watch after months of slowing momentum, consolidation and a downside break below $50,000 and $40,000. Bitcoin is down about 37% month to date and has experienced a series of sharp drawdowns similar to 2017 which preceded a bear market.

  • The relative strength index (RSI) on the daily chart has been oversold over the past week as price held support around $30,000. However, the RSI is not yet oversold on the weekly chart which suggests price upside should remain limited around $40,000.
  • Bitcoin is below the 100-day and 200-day moving averages. This indicates the corrective phase that began earlier this month remains in effect.
  • On intraday charts, bitcoin failed to hold support. Further downside towards $33,000 could encourage short-term buyers and stabilize the current decline.

Despite signs of a broader trend reversal, there are still short-term opportunities for active traders. “BTC can be very volatile, especially compared to assets in traditional markets,” wrote Justin Chuh, senior trader at Wave Financial, in an email to CoinDesk.

“No one is borrowing to short spot BTC, we sill have an upward sloping forward curve, and downside protection remains relatively light,” said Chuh, who added that support will need to hold above $30,000, or otherwise bitcoin would be down on the year.

CoinDesk - Unknown

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Americas: BTC Dominance Reaches 7-Month Highs, Alts Suffer

The latest moves in crypto markets in context for May 26, 2022.

The latest moves in crypto markets in context for May 26, 2022.

CoinDesk - Unknown
2
CoinDesk - Unknown
MetaMask Has a Plan to Help Victims of Crypto Scams

The popular Ethereum wallet has partnered with recovery specialist Asset Reality.

The popular Ethereum wallet has partnered with recovery specialist Asset Reality.

CoinDesk - Unknown
3
CoinDesk - Unknown
How NFTs Will Drive the New Wave of Consumer Loyalty

You’re not going to get rid of something that much of the world finds useful just because of some volatility.

You’re not going to get rid of something that much of the world finds useful just because of some volatility.

CoinDesk - Unknown
4
CoinDesk - Unknown
For Financial Advisors, Bitcoin Is the Next Nasdaq

The investment opportunity in bitcoin used to be like a single company, but now it's more like an entire asset class.

The investment opportunity in bitcoin used to be like a single company, but now it's more like an entire asset class.

CoinDesk - Unknown