Bitcoin Holds Short-Term Support; Faces Resistance at $40K

Bitcoin (BTC) remained under pressure over the weekend as traders react to China’s latest news about tightening crypto regulation. The cryptocurrency is down about 36% month to date and was trading around $37,000 at the time of writing. Price recoveries should remain limited to $40,000 as the broader uptrend weakens.

Slowing momentum has been the dominant theme this year as bitcoin failed to maintain all-time highs. Long term sell signals were in place before headlines accelerated price declines, which preceded a gradual and then sudden capitulation of long positions.

• The relative strength index (RSI) on the four-hour chart has struggled to break above neutral over the past week. In a downtrend, oversold readings can persist for extended periods, which suggests a lack of significant support levels.
• Bitcoin re-tested minor support around $30,000 over the weekend, but stronger support is seen around $27,000.
• BTC is trading below the 100-day moving average and the correction does not appear exhausted at current levels. This means sellers should remain active as bitcoin struggles to break above $40,000.