Daily Market Recap - BTCUSD Bearish risk dominates on Bitcoin

Bitcoin continues to deepen its losses on Wednesday with a pullback towards $56,000. The cryptocurrency has been hurt by concerns over a potential tightening of regulations in the U.S., while the use of Bitcoin has been singled out in money laundering cases.

In addition, the cryptocurrency sector was impacted by a power outage in China's Xinjiang region, where a significant amount of mining activity is believed to take place.

Furthermore, flexible workspace provider WeWork announced on Tuesday that it would begin accepting some cryptocurrencies for payments, but despite this, it has not helped Bitcoin regain its footing.

The price of Bitcoin rose by almost 1600% from the low of March 2020, when the pandemic began, to the day of Coinbase's IPO on April 14, when the all-time high of not far from $65,000 was reached.

The craze for speculative assets and so-called growth stocks has allowed both investment banks and individuals to reap significant profits. This same phenomenon has also supported the new upward cycle seen in the price of bitcoin and other cryptocurrencies, allowing new all-time highs to be reached for many of them.

On the other hand, while speculative valuation and adoption have accelerated, actual use as a currency or store of value has not become more democratic.

From a technical perspective, Bitcoin was in a bullish momentum well within a channel up until last week. However, it is clear that the market has breached the lower bound and the 50-period moving average that has supported the price since the beginning of the year.

For now, the underlying trend remains bullish, but sellers have decided to come out of the woodwork to initiate a corrective move. An incursion below $53,500 would pave the way for a deeper drop to $49,740 and then $44,850. On the other hand, assuming buyers manage to recapture $58,350, then we could see a new leg up.

(Chart Source: Tradingview 21.04.2021)

In conclusion, we must now be more cautious about the asset, as Bitcoin has been capping around $60,000 for quite some time without accelerating to new highs. Thus, a breathing phase towards the support levels and then a stronger start would be rather healthy and legitimate.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.