Bitcoin Crashes Below $40K – Brace for a Correction - Forex News by FX Leaders
Bitcoin - BTC/USD Chart

Bitcoin Crashes Below $40K – Brace for a Correction

Posted Wednesday, September 22, 2021 by
Arslan Butt • 2 min read
 BTC/USD closed at $40,664.0, after placing a high of $43,622.3, and a low of $39,678.0.The BTC/USD extended its losses, declining for third consecutive session on Tuesday, to reach its lowest level since August 5.

Bitcoin dropped below the $40K level on Tuesday, following the crash in the global financial markets. The cryptocurrency market also followed the global stock markets downwards, reaching new monthly lows on Tuesday, amid the growing uncertainties. While Bitcoin suffered declines of several thousand-dollars in a day, the altcoins were hit even harder, with massive double-digit price dumps. Neither was the cryptocurrency market spared, since it was affected by the fears prompted by the potential collapse of Evergrande. Bitcoin, a leading cryptocurrency in the market, declined from $48K to below $40K, and recorded a massive sell-off. ETH/USD also fell, and reached below the 3K level.

 

BTC/USD
The massive sell-off in the market could also have been triggered by the latest comments made by cryptocurrency enthusiast and American TV personality Jim Cramer. In his opinion, the Evergrande debt crisis in China could keep causing severe disruption in the financial markets, including the cryptocurrency market. He advised people to cash out some of their cryptocurrency holdings to prevent future losses.

Cramer’s Remarks Trigger a Bearish Bias

Cramer believes that the debt issues of the real estate giant will continue to harm the digital asset market in the near future, and crypto investors should take some profits while they can, to avoid turning it into a loss. These comments prompted people to take measures to avoid further massive losses, and as a result, people started selling their holdings while they could still book profits from them, which in turn caused the price of Bitcoin to drop.

Meanwhile, the largest investment bank in Latin America, a 38-year old Brazilian financial institution by the name of BTG Pactual, has announced the launch of its crypto trading and custody platform. According to the press release, the company, which has an annual revenue of over $1.8 billion, has successfully rolled out a digital currency platform called Mynt. This platform will offer the clients of direct banks exposure to Bitcoin and established altcoins like Ether. The Brazilian company claims that it was the first lender in the region to launch a dedicated cryptocurrency trading platform that will support other blockchain-based assets later. This news kept the losses in BTC/USD limited for the day.

Bitcoin (BTC/USD) – Technical Outlook

Trading in Bitcoin was sharply bearish, dipping below $40K, but it has now risen above the 41,271 level again. At the moment, Bitcoin is trading at 42,304, and it is heading towards the next resistance level of the 42,968. BTC managed to break out of this level, exposing the Bitcoin price to the next resistance level of 44,269. This particular resistance level is being extended by an upward trendline, which can be seen on the 4-hourly timeframe. The closing of candles below the 44,269 level could help us capture a sell trade in Bitcoin.

Bitcoin - BTC/USD Chart

Daily Technical Levels

Support               Resistance
39.020.5             42.964.8
37.377.1              45.265.7
35.076.3             46.909.1
Pivot Point:       41.321.4
Well, on the lower side, Bitcoin may find immediate support at the 41,271 level, and a breakout at this level would expose BTC to the next support level of 38,898. The leading technical indicator, the RSI, remains in the selling zone today. Therefore, the odds of a selling trend remain stronger. Furthermore, the 50-simple moving average also suggests a selling trade below the 45,341 level. Overall, a bearish bias dominates in Bitcoin.
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