With the price of BTC dropping sharply after it broke its $45K support, the index has been in a more severe market sentiment sitting at 10 on the Bitcoin Fear and Greed Index. With that, the price of Bitcoin has since then slowly recovered to $42,928, but the real question is, has the market quickly recovered, or could this be a bull trap?
Bitcoin Fear and Greed Index
In order to assess the state of the market, it is important to backtrack the market sentiment to look for key pointers that could point towards a potential reversal. As seen on Alternative.me, the Bitcoin fear and greed index market sentiment hasn't broken in the last month.
When the price of BTC dropped drastically around Jan 7 to 9 of this year, the Bitcoin market sentiment was sitting around 18 to 10, putting it at the state of "extreme fear." To add, although the market has gone back to sitting around 21-23 the status hasn't changed from "extreme fear" to "fear."
BTC Support and Current Price
As of the moment, on CoinGecko, the price of BTC currently sits at $43.4K and has slightly recovered from its previous drop at around $41K, even brushing $39K. When observing the price of BTC and taking into account the previous "bull trap," it is important to proceed with caution as the price could still drop if it breaks its $40K support.
For those who don't know what a bull trap is, it is a temporary short bullish cycle during a full bearish cycle where the price increases slightly before dropping again. Whales and other investors do this to help boost the prices as they exit their positions.
Analyst Says Movement Remains to the Downside
As per an article by Forbes, the real question is what would happen to Bitcoin after it broke its $40K support. A senior technical analyst at StockCharts.com, Julius de Kempenaer, stated that the latest decline shows additional confirmation of the bearish trend of BTC.
De Kempenaer stated that the support is at $40K, with its previous $45.5K support now acting as the cryptocurrency's resistance. He even emphasized that as long as the series of lower lows and lower highs remain intact, the movement's ease remains to the downside.
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Analyst Warns of Next Support Level at Around $30K
As mentioned by de Kempenaer, the next support is at $37K, but the main level to watch next would be at $29.5K to $32.0K. He stated that this is where the major support is clustered.
Head of research at Valkyrie Investments also spoke regarding the bearish shift noting that low time moving averages have shifted from strongly bullish to neutral which shows additional risk-off-related rate hike eventualities and fears are starting to fuel the bearish price action and shift the moving average from neutral down to bearish.
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Written by Urian B.
