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Bitcoin Drops Below $90,000 Amid Economic Uncertainty
Bitcoin has suffered a significant decline, falling below the $90,000 mark on Tuesday, marking a three-month low. This drop continues a downward trend since reaching its all-time high the previous month, largely influenced by a prevailing economic uncertainty that has impacted investor confidence.
In Tuesday’s trading, Bitcoin broke beneath the neckline of a double top pattern, a technical signal confirmed by higher-than-average trading volume, showcasing the continuation of its bearish momentum.
Investors are advised to keep an eye on critical support levels around $80,400 and $74,000, as well as resistance levels near $98,500 and $106,000.
Today, Bitcoin (BTCUSD) saw its value dip below $90,000 again, following a previous drop below $86,000 before rallying to approximately $89,000. This pressure stems from reports indicating that the Trump administration’s planned tariffs on Mexico and Canada will go ahead as planned. Tariffs are often viewed by investors as inflationary, potentially hindering anticipated interest rate cuts this year—moves that generally favor non-yielding assets like Bitcoin.
Historically, March has been a inconsistent month for Bitcoin; analysis from the crypto data site Coinglass reveals that returns for Bitcoin during this month have been evenly split between positive and negative from 2013 to last year. Although Bitcoin has dipped 5% since the beginning of the year, it has still risen approximately 25% since the U.S. presidential election, fueled by optimism surrounding potential favorable policies from a Trump-led administration and a supportive Congress.
To better understand the current market dynamics, we will delve into Bitcoin’s price chart and apply technical analysis to identify key levels to monitor.
Following the formation of two discernible peaks between December and January, Bitcoin’s price has been on a downward trajectory, establishing a classic double top pattern. The recent breakdown below the neckline of this pattern, confirmed by increased trading volume during Tuesday’s session, signals a concerning trend.
Moreover, despite Bitcoin reaching a slightly higher price last month, the relative strength index (RSI) did not follow suit, indicating a bearish divergence. This divergence suggests a weakening momentum in Bitcoin’s price movement.
However, recent sell-offs have pushed the RSI into oversold territory, hinting at the potential for short-term recoveries.
As we investigate further, several significant support and resistance levels on Bitcoin’s chart warrant attention from traders and investors alike.
Should Bitcoin experience further declines and fall below the neckline of the double top pattern, an initial support level may emerge at around $80,400. This level coincides with the 200-day moving average (MA) and the significant price points from previous upward movements in November.
The next notable support level lies near $74,000, which could present a buying opportunity while being close to a horizontal line that traces multiple significant price peaks from throughout last year.
Conversely, if there is a recovery that pushes Bitcoin above the double top’s neckline, it may encounter resistance at the $98,500 level, which aligns with the 50-day MA and coincides with previous trading levels from late November.
A successful close above $98,500 could pave the way for a potential test of the $106,000 mark, where investors who have averaged down might consider taking profits as prices approach the previous peaks of the double top pattern.
The analysis and opinions expressed in this article are intended for informational purposes only. For more details, please review our warranty and liability disclaimer.
As of this writing, the author of this analysis does not hold any positions in the mentioned securities.
For further insights, read the original article on Investopedia.
Source
finance.yahoo.com