Dramatic Dip in Bitcoin – What's Behind It?
After reaching a high of $52,888.0 and a low of $43,347.0, the BTC/USD pair was closed at $46,778.0. The BTC/USD fell below $44,000 for the first time in a month due to El Salvador's new Bitcoin Law. The sharp drop in BTC/USD could be attributed to profit-taking by BTC holders on Tuesday, shortly after El Salvador moved forward with the acknowledgment of the digital currency as legal tender in a landmark decision. Investors were wary of the move, which could have substantial implications for global adoption.
The big sell-off in BTC/USD occurred during President Bukele's first national Bitcoin day in El Salvador. The government offered all residents who downloaded Chivo, the government's BTC wallet, $30 in BTC. On Tuesday, the wallet software was in such high demand that the site went down for a time, providing evidence of the bitcoin frenzy in Central America.
El Salvador's Bitcoin Day was supposed to be highly favorable for the cryptocurrency, as several worldwide supporters, including President Bukele, had committed to buy $30 worth of Bitcoin on Tuesday to show their support for the country's courageous decision. The sharp drop in Bitcoin prices was unanticipated, and Bukele made no apologies for blaming it on IMF and World Bank activities.
The International Monetary Fund had previously rejected Bukele's plan to make Bitcoin legal tender on macroeconomic, financial, and legal grounds. Similarly, the World Bank has refused to assist El Salvador in implementing the Bitcoin Law. When BTC/USD values unexpectedly fell on Tuesday, Bukele and others accused the IMF and World Bank of manipulating the market to portray his policy idea as a failure in the press.
However, several observers attributed the abrupt drop in BTC/USD prices to numerous investors' huge liquidation of long holdings to enter the alt-coins market, which had recently taken a beating. Meanwhile, Bitso, a Mexican crypto exchange, has announced that it would be the exclusive crypto service provider for Chivo, El Salvador's official Bitcoin wallet. Along with Silvergate Bank, Athena Bitcoin, and Algorand, the company announced on Tuesday that it would help build a state-backed BTC wallet.
Furthermore, Visa's Vice President stated the company's plans to integrate crypto assets into its platform for use as both a payment and a store of value. The CEO of Brazil VISA, Fernando Teles, outlined the concept of tokenized payments. At the same time, an API is meant to bridge the gap between traditional financial institutions and cryptocurrency businesses. The VISA aims to incorporate Bitcoin and other crypto payments in Brazil; however, this news failed to stop BTC/USD from falling.
BTC/USD Intraday Technical Levels
Pivot Point: 47671.0
BTC/USD - Technical Outlook
Bitcoin is currently trading with a significant bearish bias underneath the 47,574 pivot point mark. Bitcoin has produced three black-crow candlestick formations in the 4-hour timeframe, indicating a solid selling tendency among investors.
Having said that, Bitcoin is currently trading at 45,450 and is on its way to the next support level of 42195. Bitcoin is currently trading at 45,448 and is on its way to the next support level of 42,195. On the negative side, a breach of the 42,192 level is expected to push Bitcoin prices down to the next support level of 37,517.
The RSI is steady in the oversold region while the 50-period simple moving average is hovering around 49437, and candlesticks closing below this level indicate a strong selling bias in Bitcoin. As a result, the strategy is to search for a selling opportunity underneath a pivot point resistance mark of 47,575 with a target price of 42,250.
All the best!
JOIN LONGHORNFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.