Bitcoin is currently trading at $29,600 following a devastating sell-off that saw it lose the critical $31,000 level of support.
The world’s largest cryptocurrency is now trading 29% lower than when it printed a new all-time high of $41,000 on January 8.
The clearest factor in the recent fall in price has been the rise of the Dollar index (DXY), which is currently testing a diagonal level of resistance dating back to March, 2020.
If a DXY breakout comes into fruition it will more than likely test 91.785, which would coincide with a further drive south for Bitcoin with targets emerging at $27,750 and $24,100.
From a macro perspective, Bitcoin could remain bullish as long as it establishes a level of support above the previous all-time high at $20,000, although it remains to be seen whether institutions that bought in above $30,000 become to consider liquidating their respective positions.
The two more recent investments came earlier this week with mining company Marathon investing $150 million into Bitcoin, while MicroStrategy purchased and additional $10 million to take its aggregated holdings up to $1.13 billion.
Institutional investors have not yet felt the squeeze of a Bitcoin bear market, which could cause additional panic if Bitcoin begins to continue down to the $27,750 level of support.
On the lower-time frames, it’s hard to ignore Bitcoin’s posture of forming consecutive lower highs followed by lower lows, both of which are indicative of a downtrend.
However, it’s worth noting that Bitcoin has bounced from below $30,000 on two occasions since the turn of the year so until it begins to print daily candles beneath $27,750, it remains in a relatively neutral zone.
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