The price of Bitcoin (BTC) has failed to break above the psychological $50,000 resistance going into the weekend and has dropped below the $48,000 level on March 6.
Now traders are watching whether BTC/USD can break above the $50,000 level to resume the bull cycle. Conversely, a drop below the recent lows below $46,000 will likely open the door to new lower lows, which may then pose a threat to the bull run that has been in place for almost a year, at least in the short to medium term.
Pseudonymous trader Rekt Capital pointed out similar price levels to watch. If BTC fails to hold the current levels above $46,000, the trader expects Bitcoin to bottom somewhere in the area between $38,000 and $45,000 despite Bitcoin posting higher lows in recent days.
"BTC higher lows hold until they don't," he wrote. "Each subsequent reaction from the January HL was lesser and lesser. Could be the same now. Better to be safe than sorry by preparing for a potential breakdown from this HL."
#BTC Higher Lows hold— Rekt Capital (@rektcapital) March 6, 2021
Until they don't
Each subsequent reaction from the January HL was lesser & lesser
Could be the same now
Better to be safe than sorry by preparing for a potential breakdown from this HL
And should this breakdown occur - $BTC will bottom on this retrace pic.twitter.com/VUzgXbVkCX
One major factor that's likely causing the current downward pressure on price is an uptick in whales' activity. Data from CryptoQuant shows an increase in large transactions to exchanges on March 6, though miners' activity remains relatively low.
As shown in the chart below, previous upticks in whales moving funds to exchange coincided with drops in Bitcoin price on March 3-4.
Macroeconomic headwinds for Bitcoin
As Cointelegraph reported, Bitcoin is also facing downward pressure from macroeconomic headwinds. A sharp spike in 10-year U.S. Treasury yields and a pullback in tech stocks, in particular, are weighing on cryptocurrency prices as investors flee risk-on assets.
Meanwhile, the Dollar currency index, or DXY, has broken through technical resistance, hitting the highest levels since November 2020.
Cointelegraph Markets analyst Michael van de Poppe points out that Bitcoin's downtrend remains intact after the latest attempt to break $50,000 failed.
"This means that the trend is still down and overall weakness on the markets in the short term," he explained. "$50,000 is so far a no-go for Bitcoin."
However, Bitcoin, as well as gold, may see some respite soon as the DXY and Treasury yields are nearing their own technical resistance levels.
"I believe that the yields are getting topped out relatively soon including the DXY," explained van de Poppe. "Both are in resistance areas, which means that we should be close to a top formation on these two, but also on a bottom formation for Bitcoin and gold relatively soon."
March is often a bad month for markets and history repeats itself. So macro-wise, we're still bullish on the cycle and heating up for continuation, despite the recent interest in yields."