Crypto markets continued a second day of slide on Friday as bitcoin hovered above pivotal support at $40,000 in European hours, data shows.
Bitcoin (BTC), the largest cryptocurrency by market cap, bounced to $40,100 early Friday, after losing 2.9% Thursday.
Bitcoin is trading near the $40,000 support level, which runs through the lows of the first three months of the year. Current price action is, however, a sign of alarm among some traders.
“A formal signal to break the support will be considered a failure under the previous lows in the $38,000 area,” Alex Kuptsikevich, senior financial analyst at FxPro, wrote in an email to CoinDesk. “The ability to develop a reversal to the offensive from these levels, on the contrary, will reinforce the importance of this moderate uptrend line.”
The Crypto Fear and Greed Index, a popular sentiment indicator that's hosted on the website Alternative.me, suggested “extreme fear” among crypto investors on Friday, with a reading at 22. That's down from last week’s “fear” reading of 37.
The index generates a single number, between 1 and 100, with 1 indicating that the crypto market is in a state of extreme fear (meaning people are selling,) while on the other end of the spectrum, 100 indicates that the market is undergoing an extreme level of greed (meaning people are buying).
Analysts said bitcoin could see more choppy price action in the coming months.
"Bitcoin sold off hard during Q4, but then during the first frame of 2022 it underwent a period of relatively directionless trading,” explained Paul Robinson, strategist at DailyFX, told CoinDesk in an email.
“Contracting price action over the last three months could continue to make things even choppier in the near term, but given the nature of volatility (expanding/contracting) and the fact that this is bitcoin, volatility is likely to ramp up again as we head towards the middle of the year,” Robinson added.
Those predictions are despite April being a historically bullish month for bitcoin and other cryptocurrencies.
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