Bitcoin, the world’s leading cryptocurrency by market capitalization, has experienced a significant drop during the start of December, losing over 5% of its value in the past 24 hours. This bearish momentum has sent ripples across the crypto market, impacting altcoins like Ether and XRP. As of now, Bitcoin is trading above $86,000 after briefly touching the $85,000 region earlier.
Factors Contributing to Bitcoin’s Decline
The recent downturn in Bitcoin prices can be attributed to multiple factors. Firstly, the Bank of Japan (BoJ) Governor, Kazuo Ueda, mentioned that interest rate hikes might be considered if the economy evolves as predicted. Such measures could increase borrowing costs and negatively impact carry trades, exerting pressure on risk assets like cryptocurrencies.
Adding to the bearish sentiment, the hacking of the Yearn Finance protocol caused further turbulence. Within the last 24 hours alone, approximately $140 billion was wiped out from the cryptocurrency market, accompanied by liquidated leveraged positions worth $500 million.
Market Indicators Signal Bearish Trends
Analyzing Bitcoin’s technical indicators, the daily RSI currently reads 32, moving towards oversold territory after a brief recovery last week. If the RSI dips below 30, Bitcoin could face further declines in the near term. Moreover, the Moving Average Convergence Divergence (MACD) highlights a bearish momentum, with a sell signal confirming the downward trend.
Should this selloff persist, Bitcoin might test the $80,600 support level. Failing to hold this critical level could lead to Bitcoin revisiting its April 7 low of $74,508.
Possibility of a Rebound
Despite the current negative outlook, there remains a chance for Bitcoin to recover. If bullish activity reemerges, Bitcoin could target the $90,000 mark within the next few hours or days. As always in the cryptocurrency market, quick reversals are not uncommon.
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Disclaimer: Cryptocurrency investments are highly volatile with associated risks. Always do thorough research before investing and consult with financial advisors if needed.
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