Key Takeaways:
- Bitcoin prices dropped to early Oct levels on Nov 26.
- The decline followed a downtrend in global financial markets caused by new Covid-19 strain FUD.
NEW DELHI (CoinChapter.com) — Bitcoin prices fell to a seven-week low as a new variant of the coronavirus prompted traders to panic sell risk assets across global financial markets.
Other cryptos fell too, and the broader crypto market at one time lost nearly $337 billion before prices recovered. Ehtereum (ETH) fell 14.1%, trading below the $4,000 price level before recovering. Binance Coin (BNB) survived a 17.3% high ($666) to low ($550) fall before recovering.
The crypto market decline mirrored the performance of global stock markets. A new Covid variant identified in South Africa sparked the global liquidation of assets. As a result, European stocks went to their lowest levels since July 2021, with US equities following suit.
In detail, a heavily mutated coronavirus strain has scientists worried about the effectiveness of existing vaccines and cures. South Africa reported the first cases of this new strain. Moreover, a traveler in Hong Kong, arriving from South Africa, tested positive for the new strain.
A new strain has raised concerns about lockdowns and travel restrictions, adversely affecting global economic activity.
Ironically, Bitcoin is often touted by supporters as a hedge against traditional financial market volatility. However, Bitcoin’s recent price action has often followed the traditional financial markets, such as the crash during China’s Evergrande debt crisis.
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Meanwhile, gold, a traditional finance safe-haven, climbed almost 1.5% on Friday morning before succumbing to the sell-off and its 9-day long downtrend.
However, for Bitcoin, other negative factors came together to pull prices down, such as the US tax-reporting requirements for digital assets, India’s proposed bill that might ban cryptos, and China’s increased clampdown on markets.
Bitcoin Price Charts
Bitcoin currently has analysts forming two camps, with some claiming the bears have a firm grip on BTC and others advising to buy the dip. Moreover, Bitcoin has historically offered Black Friday’ sale’ to investors, with prices going down towards Nov-end before launching a bull run.
On Friday, Bitcoin prices fell 10.95% between high ($59,756.37) to low ($53,210.83). The decline also saw Bitcoin journey into below $55,000 price levels for the first time since early Oct. At present, BTC has immediate resistance at $57,242.
If Bitcoin reverses today’s downside move, the next resistance target for Bitcoin would be near its 26-day EMA at $59,477. Moreover, an uptrend would likely draw in investors who would likely drive prices towards $61,070, near Bitcoin’s 50-day MA line. BTC would likely consolidate for some time before moving towards immediate resistance.
Bitcoin has support from the ascending channel and the 100-day MA trendline. On Friday, BTC tested the upward channel support before recovering. However, if bulls fail to pull BTC out of today’s slump, the world’s largest crypto would likely test support at $53,137.
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$53,000 is a key support level, as analysts speculate BTC would likely start a bull run due to the dip creating increased buying pressure. BTC will likely try to consolidate near the $51,177.70 price level if prices breach below immediate support.
A marketwide sell-off would likely result in Bitcoin moving to $49,720 before recovery occurs. Meanwhile, BTC’s MACD continues to be bearish. Bars on the MACD histogram that plot the difference between the MACD line (12-day and 26-day EMA difference) and the MACD signal line (9-day EMA of MACD) are still negative.
However, the histogram bars seem to be contracting, indicating that the MACD line is trying to move upwards to form a bullish crossover. The RSI for BTC is currently neutral, clocking a value of 37.36 on the daily charts.
At the time of writing, BTCUSD was trading at $54,442, down 7.45% on the day.
