Bitcoin (BTC), which was above $41,000 Monday evening, had an intraday dip towards $40k support on Monday as risk-off sentiment returned.
Bulls were unable to sustain their momentum after reaching highs of $42,250 on the weekend.
Marcus Sotiriou is an analyst with UK-based digital asset broker GlobalBlock said on early Monday that the retracement in BTC price was down to “fears surrounding the Russa-Ukraine war.”
He pointed to heightened threats from Russia about the situation in Ukraine’s city of Mariupol and reports of mercenaries seeking to assassinate President Zelensky as major concerns.
“These events have lead to a risk-off sentiment for global markets this morning, as the Dollar Index climbed whilst Bitcoin and equities sold off,” Sotiriou said in a note as Bitcoin struggled below $41,000.
After Fed Chair comments, BTC slips
Late Monday market deals saw more than $20,000,000 in BTC longs liquidated. Most of the pain came after Jerome Powell, the US Federal Reserve Chair, made comments to the market.
Powell said that the Fed was prepared to take a more aggressive approach to addressing inflation in his remarks to the National Association for Business Economics.
The Fed Chair stated that the central bank could increase its rate by 50 basis points as soon as May. This would jolt investors’ risk-averse sentiment. Wall Street’s negative reaction led to a similar move in the Bitcoin market, which saw BTC fall to $40,600.
This means that bulls still have difficulty turning the immediate resistance levels of $42k-$44k to support. It is possible to see that bears are still in control of these supply areas if you look at it the other way.
A ‘healthy’ pullback but bulls must need to hold $40k
Mikkel Morch, Executive Director at digital asset hedge fund ARK36 remains bullish on BTC though, noting in a comment that the retracement appears to be a “healthy” pullback following last week’s upside.
“Even though Bitcoin has retraced a bit after tagging $42K over the weekend, it still managed to close the week well above $40K and is currently holding the $41K levels. Such a retrace seems healthy after a notable move up over the past week,” he noted.
Credible Crypto, pseudonymous crypto analyst believes Bitcoin will need to break below $42,500 to have a better chance at rolling higher. If this fails, Credible Crypto predicts that Bitcoin will need to break below $42,500 in order to be more likely to move higher.
We still need to break the 42.5k mark to get the ball moving. PA has been developing over the past few days, so either one of these scenarios would be valid/logical to the triangle structure. We are close. $BTC https://t.co/TxOo251YHI pic.twitter.com/1EsteKBNcM
— Credible Crypto (@CredibleCrypto) March 21, 2022
It’s a perspective Morch also sees developing if buyers do not hold above $40k for a continuation move. But, he remains optimistic that the market will rebound to its recent high. A breakout above the weekly threshold would likely bring the target at $46k into focus.
“As long as BTC stays above $40K, there is a good chance of continuation. We can only hope for a longer-term uptrend if the bulls are able to overcome the resistance at $46K. Until then, the choppy short term movements may still continue for some time,” added the hedge fund manager.
Bitcoin traded for $41,008 as of Monday night.