In the aftermath of bitcoin’s biggest single-day price drop in nearly four weeks, investors licked their wounds with the soaring dollar, and continuous crackdown by China on crypto mining kept the crypto market tanking lower.
On Tuesday, the flagship crypto posted its worst daily loss in nearly four weeks, putting an end to any hopes of a return to last week’s all-time high near $69k. The bitcoin price was down more than 5% for the day.
Market pundits expect some gravity around $58k following this awaited leverage washout.
In intraday charts, the cryptocurrency appeared to be oversold at $59.5k support.
There appears to be a limited downside for now into London trading hours based on short-term indicators. According to the relative strength index on the four-hour chart, it has been oversold since Oct. 27, right before a 10% price increase.
Despite waning upside momentum, the RSI on the daily chart is neutral. This indicates that intraday buyers are likely to take profits around $63K.
Over the next few days, there may be a period of consolidation before Bitcoin establishes a stronger footing around the $58k level.
Traders have pointed to a potential drop in enthusiasm after last weekend’s Taproot upgrade on the Bitcoin blockchain, the network’s first major upgrade in four years, as one reason for this week’s sell-off.
There’s some speculation that higher inflation might lead the Federal Reserve to tighten monetary policy more rapidly. Investment assets considered to be risky, such as bitcoin and other cryptocurrencies, could be put under downward pressure by such a move.
Despite its popularity as an inflation hedge, Bitcoin could face a massive wave of risk aversion if the Fed increases rates rapidly.
