The price of stumbled on Monday as investors assessed the risks from rising rates and the potential for more tightening by the Federal Reserve.
Bitcoin last fell 7% to $40,009.78, according to Coin Metrics. Earlier in the day it fell to $39,785.68, falling below the key $40,000 support level for the first time since Mar. 16.
The decline came after the 10-year Treasury yield hit a three-year high of 2.78% Monday. Riskier assets tend to fall when yields rise. On Monday the tech-heavy Nasdaq Composite was down by more than 1%.
Though bitcoin should trade independently of the stock market, a correlation between the two has been particularly high in recent months. Bitcoin price has stronger bearish signals than last week’s selloff. Bitcoin price has multiple signals targeting levels under $40,000. Invalidation of the downtrend is a break of $43,333.
Bitcoin price is printing larger bearish engulfing candles on Monday than those seen last week on the 4-hour chart. The current selloff looks fueled with power and has a few confluence zones pointing at levels sub $40,000.
Bitcoin price action suggests the bears are stronger than before. Bitcoin price selloff looks like it is just getting started as the bears have demonstrated supreme power to start this week’s trading session. The current price of $40,780 looks very unlikely to find support. Last week, the Bitcoin price consolidated four days before falling 10% in just one day.
Traders could expect a similar behavior as the BTC price consolidated again for four days throughout the weekend and has shown a much more forceful price decline from the bears.
Bitcoin price was forecasted last Thursday to endure further drops in price. Now that the selloff has unfolded, analysts’ next question is where it will end. A mirrored move of last week’s selloff points to $39,100, while a Fibonacci projection tool has a 2.618 level in the mid $38,000 zone. Both targets will easily get breached with the lack of bullish defense displayed in the current BTC price action.
Traders can either jump into the downtrend and wait for another price pattern to surface on the 4-hour chart. Invalidation will be a price spike above $43,333. If this were to happen, the $50,000 BTC price target would be back on the table, resulting in a 20% increase from the current Bitcoin price.
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