Bitcoin is striving – and failing – to break above key technical hurdles this week, moving lower towards a major inflection point instead.
The cryptocurrency has flirted with regaining the $40,000 mark all week, but has failed to do so, showing strong resistance at that threshold. Additionally, it has tried to close above its 100-day moving average over the past four sessions but is struggling with that as well.
Meanwhile, the digital coin appears primed to near an inflection point soon – its 100-day moving average, its latest price and its 50-day moving average appear likely to converge.
“Bitcoin is back in negative territory after prices ran into a wall of resistance around $40,000,” Craig Erlam, a senior market analyst at Oanda, said in a note.
“Perhaps profit-taking hasn’t run its course just yet.”
Mr Erlam sees $36,000 as a key level to watch – it coincides with resistance seen in late June and early July and also represents a 50 per cent retracement of the move from the recent lows to highs.
Bitcoin fell as much as 6.1 per cent during New York trading hours on Thursday to $37,326. That’s its lowest level in more than a week. It snapped a three-day losing streak on Wednesday.
Although supportive comments from billionaire Elon Musk and Ark Investment Management’s Cathie Wood, as well as speculation over Amazon’s possible involvement in the cryptocurrency sector, had helped Bitcoin rally in recent days, it has retreated since as it comes into greater focus from regulators.
While some strategists said it was due for a pullback, others cited a new push by Congress to require cryptocurrency brokers to report transactions to the Internal Revenue Service, a move that could create some unwelcome tax bills.
Meanwhile, US Securities and Exchange Commission chairman Gary Gensler signalled that regulators may be more open to a Bitcoin exchange-traded fund if it were based around futures rather than the cryptocurrency itself. A lot of cryptocurrency fans, many of whom had been hoping for a different structure, were disheartened by the news.