Bitcoin (BTC) Treads Water After Brief Visit to Sub-$39,000

Key Insights:

• Bitcoin (BTC) fails to revisit $40,000 with downside risks lingering.
• Increased government scrutiny and the widening ban on Russian crypto accounts could test sentiment towards cryptos.
• The broader crypto market found support despite Russia’s invasion of Ukraine going into day 10.

A 3-day losing streak came to an end for Bitcoin (BTC) on Saturday. Another return to sub-$39,000 levels was brief, with Bitcoin closing out at the $39,000 level for a 2^nd consecutive day.

Partially reversing a 7.82% slide from Friday, Bitcoin rose by 0.65% to end the day at $39,407. A day high of $39,596 came short of testing resistance at $40,000 and the day’s First Major Resistance Level at $41,576.

While Bitcoin had a range-bound session, Ripple’s XRP and Terra (LUNA) saw impressive gains.

XRP rallied by 5.91%, with LUNA ending the day up by 4.25%.

For XRP, news of progress towards an end to the SEC – Ripple case provided support. The market is betting on a favorable outcome to the SEC – Ripple case, despite the SEC’s move against the crypto market this year.

Demand for LUNA has also been strong following the Luna Foundation Guard private sale last month. The LFG created a Bitcoin (BTC) denominated reserve for Terra’s largest stablecoin, TerraUST (UST). Since the private sale, it is evident that investors have supported the use of Bitcoin as a reserve to reduce volatility in periods of market stress.

For the remaining crypto top 10, the gains were more modest.

ADA (+2.37%), AVAX (+1.44%), BNB (+2.75%), ETH (+1.63%), and SOL (+1.46%) failed to make a dent into Friday’s losses.

Bitcoin Fear & Greed Index Hits Reverse

The Fear & Greed Index held steady on Saturday, non-responsive to Bitcoin’s sideways move on the day.

After a slide from 39/100 to 22/100, the Index held steady at 22/100 this morning, reflecting investor sentiment. Last week, the Index had briefly returned to the “Neutral” zone before sliding sub-25/100 and into the “Extreme Fear” zone.

For the Bitcoin bulls, the Index will need to move back through to 54/100 to bring $50,000 levels back into play for Bitcoin. A fall to sub-20/100 would deliver sub-$30,000 levels.

With the global equity markets closed on the weekend, there were no signals for investors on the day. Negative news updates on Russia’s invasion of Ukraine likely contributed to Bitcoin’s failure to return to $40,000 levels.

Bitcoin Price Action

At the time of writing, Bitcoin was up by 0.14% to $39,461.

Technical Indicators

Bitcoin will need to avoid the day’s $39,214 pivot to make a run on the First Major Resistance Level at $39,788. Bitcoin would need broader market support to break out from Saturday’s high of $39,596.

In the event of another extended rally, Bitcoin could test the Second Major Resistance Level at $40,163. The Third Major Resistance Level sits at $41,102.

A fall through the pivot would bring the First Major Support Level at $38,839 into play. Barring an extended sell-off throughout the day, Bitcoin should avoid sub-$38,000 levels. The Second Major Support Level at $38,214 should limit the downside.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. Bitcoin continues to sit below the 100-day EMA. The 50-day EMA has converged on the 200-day, with the 100-day EMA pulling further back from the 200-day EMA. A bearish cross of the 50-day EMA through the 200-day EMA would bring the Major Support levels into play.

A move through the 100-day EMA, currently at $40,600, would provide support.