Bitcoin Swings Back Above $40,000 After Major Sell-Off

Bitcoin Video 20.05.21.

Bitcoin Moves Higher As Speculative Traders Rush To Buy The Pullback

Bitcoin managed to find support near $30,000 during yesterday’s sell-off and rebounded towards the $40,000 level as speculative traders rushed to buy the cryptocurrency after yesterday’s huge sell-off.

Similar trading dynamics can been seen in other yesterday’s losers. Ethereum failed to settle below $1900 and moved towards $2700, while Dogecoin rebounded to $0.38 after trading as low as $0.2150.

While China’s decision to ban financial firms from crypto business served as the main catalyst for the sell-off, it looks that traders’ protective stops and margin calls contributed to the selling wave.

Meanwhile, some traders used the huge sell-off as an opportunity to get into Bitcoin and other cryptocurrencies at lower levels. Bitcoin’s recent correction was very strong as Bitcoin declined from the $60,000 level to the $30,000 level in just several weeks. However, I’d note that Bitcoin traded at $30,000 back in January and it remains far above the $10,000 level which was seen back in October 2020.

Technical Analysis

 

Bitcoin is currently trying to settle above the resistance at the $40,000 level. RSI has just moved back into the moderate territory so there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If Bitcoin settles above $40,000, it will head towards the next resistance at $42,000. A move above this level will open the way to the test of the resistance at $44,000. In case Bitcoin manages to get above $44,000, it will head towards the resistance at $46,000.

On the support side, the nearest support level for Bitcoin is located at $37,000. A move below this level will push Bitcoin towards the support at $35,000. If Bitcoin settles below $35,000, it will head towards the support at $32,000. A successful test of this level will open the way to the test of the recent lows at $30,000.

I’d note that a successful test of the $30,000 level may lead to a major sell-off as there are few important levels between $20,000 and $30,000.

For a look at all of today’s economic events, check out our economic calendar.