Bitcoin is in the red again: Is it a mirage that the price will reach $40,000?
Bitcoin was unable to extend its rebound to the $40,000 target on Wednesday and fell by 4%, in the heat of the collapse of the technology sector on Wall Street in the after hours market. Meta's (Facebook) results released after it ended by disappointing the market and the social network extended trading in the US down nearly 23%. The cryptocurrency market in general is tinged with red after this week's rally and the 'altcoins' give up around 5% on average.
Satoshi Nakamoto's creation trades below $37,000 after closing Wednesday at prices below this level for the first time since Jan. 26th. The digital currency left a low since January 25th at $36,800 and experts are beginning to wonder if the chances of the digital currency reaching the $40,000 target are nothing more than a mirage.
The rebound in Bitcoin has been encouraging over the past week, but so far it has failed to regain this important resistance, "which may cause some discomfort among those hoping the low is behind it," commented Craig Erlam, analyst at Oanda. "The improvement in risk appetite in the broader markets is naturally supporting the price and could ultimately be what drives it through this important resistance level, as long as it holds," he added. However, he pointed out that "we appear to be seeing some profit-taking around here which is contributing to the 4% decline today."
Experts warn that the central banks' decisions on Thursday will set the compass for cryptoassets since "Bitcoin will continue to trade as a risk asset and will probably benefit if they continue to show some reluctance to tighten their monetary policy," explained Edward Moya, an analyst at Oanda. In this sense, the expert believes that the Bank of England and the European Central Bank could have a greater than normal impact on cryptocurrencies, "as Wall Street is looking for a signal about the direction in which risk appetite is heading".
Although the Reserve Bank of Australia (RBA) refrained from raising rates during Tuesday's meeting, Governor Philip Lowe did not rule out the possibility of raising the interest rate sometime in 2022. As for the U.S., the Federal Reserve (Fed) signaled the possibility of multiple rate hikes this year, which caused risk assets, such as highly valued technology stocks and most cryptocurrencies, to suffer heavy selling.
As for other tokens, Ethereum was unable to hold at the $2,800 level, a price level it needed to comfortably break to continue its rally to $3,000. It made highs for two consecutive days right at this resistance, but has been rejected and has fallen to the $2,640 support, where the uptrend line formed on the hourly chart passes through. The fibonacci retracement continues to point to further declines to $2,600.
Other digital currencies that presented a promising outlook on Wednesday have turned sharply lower. Cardano remains above $1, but for now doesn't seem eager to stretch the recent 20% rally that presents upside potential to $1.26. Solana is faring worse and is down 10% after its bull run above $100 which it failed to extend, correcting to $98.
As for LUNA, the Terra network token, it slowed its recovery after the setback at the beginning of the week due to the Wonderland decentralized finance project scandal. And Dogecoin is down below $0.14. Total market capitalization is at $1.67 trillion, $100 billion below where it was on Wednesday.