Bitcoin (BTC) was holding above $41,000 on Monday evening following an intraday dip towards the $40k support as risk-off sentiment returned to the market.
After rallying to highs of $42,250 over the weekend, bulls found it difficult to sustain the momentum.
Marcus Sotiriou, an analyst at UK-based digital assets broker GlobalBlock said on early Monday that the retracement in BTC price was down to “fears surrounding the Russa-Ukraine war.”
He pointed to heightened threats from Russia about the situation in Ukraine’s city of Mariupol and reports of mercenaries seeking to assassinate President Zelensky as major concerns.
“These events have lead to a risk-off sentiment for global markets this morning, as the Dollar Index climbed whilst Bitcoin and equities sold off,” Sotiriou said in a note as Bitcoin struggled below $41,000.
BTC slips after Fed Chair comments
Market deals late Monday had more than $20 million in BTC longs liquidated, with most of the pain coming after comments from US Federal Reserve Chair Jerome Powell reached the market.
In his remarks at the National Association for Business Economics, Powell stated that the Fed was ready to initiate an aggressive approach towards addressing inflation.
The Fed Chair noted that the central bank could go for a 50 basis points rate hike as soon as May, jolting risk-off sentiment among investors. As Wall Street posted a negative reaction, a similar move materialised across the Bitcoin market to see BTC slip to lows of $40,600.
It means bulls are still finding it hard to flip the immediate resistance levels around $42k-$44k into support. Taken the other way round, it suggests bears still hold the upper hand around these supply zones.
A ‘healthy’ pullback but bulls must need to hold $40k
Mikkel Morch, Executive Director at digital asset hedge fund ARK36 remains bullish on BTC though, noting in a comment that the retracement appears to be a “healthy” pullback following last week’s upside.
“Even though Bitcoin has retraced a bit after tagging $42K over the weekend, it still managed to close the week well above $40K and is currently holding the $41K levels. Such a retrace seems healthy after a notable move up over the past week,” he noted.
Pseudonymous crypto analyst Credible Crypto thinks Bitcoin will need to break above $42,500 to have a better chance of rolling higher. If that fails, he predicts a scenario where the main support would be in the $29k-$32k zone.
Still need to break 42.5k to get the ball rolling, as PA has developed over the last couple of days either of these scenarios would be valid/logical for the triangle structure. We are very close imo. $ BTC https://t.co/TxOo251YHI pic.twitter.com/1EsteKBNcM
— Credible Crypto (@CredibleCrypto) March 21, 2022
It’s a perspective Morch also sees developing if buyers do not hold above $40k for a continuation move. However, he is optimistic of a rebound to the recent high, with a breakout above the weekly barrier likely to bring into focus the target at $46k.
“As long as BTC stays above $40K, there is a good chance of continuation. However, we can only hope for a more sustained leg up if the bulls manage to reclaim the resistance at $46K. Until then, the choppy short term movements may still continue for some time,” added the hedge fund manager.
Bitcoin was trading around $41,008 late Monday.