According to a note on Monday by Fairlead Strategies, the recent test and hold of an important support level at $27,200 is a result of the months-long decline in the price of Bitcoin.
The implosion of Terra, a stable coin that broke the buck and fell more than 90%, accelerated the decline in cryptocurrencies. The failure of the stablecoin caused a brief dip in the price of the digital currency to as low as $25,401.
As of Tuesday morning, the psychological price point of $30,000 has been reached.
If the coin fails to hold $27,200 as support, it could fall another 40% from current levels to $18,300.
The recent breakdown below the weekly cloud reflected negative intermediate-term momentum which increases risk beyond the near term. Both the intermediate-term and long-term momentum trends for bitcoin are currently categorized asbearish by Stockton, while its short-term trend is neutral.
Following the successful test of support, short-term oversold indicators support further stabilization.
If there is a risk-on rally and the 50-day moving average goes down, she has her eye on potential resistance. If the resistance level is tested, it would represent a potential gain of 30%.
The market value of the digital currency has fallen from a record high of $69,000 in November to about $700 billion today. The total market value has fallen from a peak of over $3 trillion.
The risk is heightened from a long-term perspective because the monthly MACD is on a sell signal and the monthly stochastics are not yet oversold.
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