Bitcoin started 2022 on a poor note and has been struggling ever since. In 2021, the digital currency has experienced a spectacular roller coaster of price volatility. Since November, the price of Bitcoin (BTC) has been steadily declining every day.
Bitcoin has fallen below the $40,000 mark, down more than 40% from its November high of nearly $69,000.
Should BTC fall below that level in order to start rising again?
According to technical analyst Mark Newton, if bitcoin falls below this level, it will be bullish. He told Bloomberg that a dip below this level would almost certainly lead to a test of $32,950.
In addition, raising the price of digital assets above $40,000 would be an important milestone for the bulls.
However, the recent sharp market sell-off near that price level suggests that Newton's forecast threshold for the long side has not been met.
With the price falling so much in such a short period of time, it seems more likely that bitcoin will fall below $35,511 than provide the much-needed boost above $40,000 for the bulls.
If the asset does not reach this milestone, it will remain on a downtrend, Fundstrat analysts say.
Analysts added that it remains in a downward sloping pattern until the daily closing price breaks above $40,000, and it is technically difficult to rule out further weakness.
Beware of "future fluctuations"
Newton's cautious approach to the stock market is reflected in this statement. Because it is impossible to predict what will happen to the market at this time, caution is the wisest course of action.
Technologists also discuss the bottom of the bitcoin market, offering a different perspective than the current model.
According to Newton, the bottom of Bitcoin has not yet been reached. Instead, experts predict that the bottom will be hit in the coming months.
He said the rally that occurred after the market crash was only temporary. Moreover, he does not see it as a sign of an upcoming medium-term rally.
“A new medium-term rally is expected to have started and this small two-week rally may be premature,” Newton added.