(Kitco News) – Financial markets fell under pressure on Tuesday as the first day back from the long weekend in the U.S. saw asset prices plunge at the prospect of higher-for-longer interest rates amid signs that inflation remains “sticky.”
Traditional markets were especially hard hit as data provided by Walmart showed that consumers have begun to reduce their spending in the face of persistent inflation, which has the potential to lead to negatively impact profit margins. At the closing bell, the Dow, S&P and Nasdaq all finished in the red, down 2.0%, 2.06%, and 2.5%, respectively.
Data provided by TradingView shows that an early morning attempt by Bitcoin (BTC) bulls to push its price past resistance at $25,000 was soundly rejected by bears, which sent the top crypto plummeting by 4.1% to hit a daily low of $24,225 in the afternoon.
BTC/USD 4-hour chart. Source: TradingView
Prior to the afternoon pullback, March Bitcoin futures prices “hit another contract high Tuesday,” according to Kitco senior technical analyst Jim Wyckoff,” who noted that “Bulls have regained the solid overall near-term technical advantage to suggest more upside, as a price uptrend on the daily chart has been restarted.”
Major resistance at $25k
According to the latest market update from Eight Global, the key area of support for Bitcoin found the region from $20,800 – $21,700 served its purpose in trading last week, resulting in “another leg up towards the $25,200 – $25,500 resistance,” which is also the 0.618 fib retracement level.
BTC/USD 1-day chart. Source: Eight Global
“In that process, we also got a confirmation of $23,500 (0.5 fibs) support and the price currently is trading with 8EMA support once again,” the analysts said.
For those looking for the opportune time to reenter the market, Eight Global noted that “Aggressive long entries could be sought during retests of the 8EMA and the 0.5 fib retracement level,” but suggested that a “more moderate place for entries is the $22,400 – $22,600 area which has not been tested for support after the latest break above.”
As for now, the main resistance that needs to be overcome is the $25,200 – $25,500 area, which bulls failed to accomplish earlier on Tuesday, followed by the next major resistance zone at $28,000.
The importance of the $25,000 resistance level was expanded upon in the latest “Ahead of the Curve” newsletter from Arcane Research, which noted that Bitcoin is “trading at its range highs from the trading range that appeared after the 3AC collapse during last year’s summer.”
According to Arcane Research, “This area acted as support during the LUNA collapse in May and acted as resistance in early August. Technically, there are few resistance levels between $25,000 and $28,000, and a potent break-out could cause a strong market reaction.”
The research firm also pointed out that last week’s rally did not reflect the performance in broad financial markets. “We saw similar signs of independent crypto strength during the weekend rallies of January. This is a positive tendency, as it might reignite external demand for BTC as a portfolio diversifier.”
A pullback in the altcoin market
The altcoin market was hard hit by the pullback in BTC as traders saw it as a sign that the market could struggle in the short term and took advantage of the opportunity to exit the market while there were still gains left to claim.
Daily cryptocurrency market performance. Source: Coin360
Notable exceptions to the downturn include Ankr (ANKR), which gained 35.24% on the day after the project revealed a new partnership with Microsoft to offer cloud hosting, while UMA (UMA) increased by 16.17% and Conflux (CFX) gained 15.47%.
The overall cryptocurrency market cap now stands at $1.11 trillion, and Bitcoin’s dominance rate is 42.5%.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
