So, just how many times can you actually poke the bear before it finally bites? Well, Bitcoin bulls might be on the verge of finding that out.
Because here we are again, with the cryptocurrency slipping back towards the key $80,000 level just as nerves around risk assets are starting to pick up once more. And while buyers have managed to hold the line so far, the feeble rebounds over the past week aren’t exactly giving much reason for confidence.
It doesn’t help that Wall Street is having another wobble of its own as fresh concerns over AI spending are weighing on tech stocks ahead of the open today. Meanwhile, the Fed hasn’t exactly rolled out the red carpet for risk-taking either with their decision and Warsh’s press conference yesterday.
And given Bitcoin’s well-established sensitivity to broader risk sentiment, there is little reason to be surprised by its latest struggles. Having said that, there is a bigger concern here than just its correlation with tech stocks. The question for traders this week is how much longer can Bitcoin keep testing the $80,000 floor before buyers finally throw in the towel?
And the chart above captures that underlying tension quite nicely. Bitcoin is once again leaning on the $80,000 mark today and the repeated arrows near that level tell the story here.
Buyers have been trying to defend the key level but any bounce off it has hardly been convincing. As such, that makes this less of a successful hold of a major support level and more of a market that is nervously pacing around an important floor area.
For the time being at least, what stands out is that the bigger bullish structure is not broken yet. However, the upside momentum has clearly cooled after the run toward the $87,000 region in September and also earlier this month.
With that in mind, a break below $80,000 and one with more conviction could really expose plenty of vulnerabilities for Bitcoin next. The next deeper areas to watch look to be around the swing region closer to $76,000 and then the September lows just under the $75,000 level. After which, a stronger retreat towards $70,000 may very well come back into view.
As things stand, the bigger recovery structure is still intact; albeit barely. However, Bitcoin looks to be running out of room to keep testing buyers’ patience.
Right now, the cryptocurrency is looking very much less like digital gold and more like a high-beta cousin of the Nasdaq. So as long as that remains true, then every wobble in the tech mood is going to keep crypto traders on edge.
This article was written by Justin Low at investinglive.com.