Good morning traders,
The BTC/USD closed at $46,778.0, after reaching a high of $52,888.0, and a low of $43,347.0. BTC/USD dropped to its lowest level in one month, below $44,000, amid the latest news on the launch of the Bitcoin law in El Salvador.
The sharp decline in BTC/USD could be attributed to profit-booking by BTC holders on Tuesday, right after El Salvador moved forward with its recognition of the digital currency as legal tender in the country. Investors became cautious, as this move could have significant implications for global adoption.
The massive sell-off in BTC/USD came in during President Bukele’s first El Salvadoran national Bitcoin day. The government offered to give away $30 in BTC to all citizens who decide to download its BTC wallet, Chivo. The wallet app was so much in demand on Tuesday that the platform temporarily broke down, which gave everyone a pretty good impression of the Bitcoin craze in Central America.
The Bitcoin Day in El Salvador was expected to be very positive for the cryptocurrency, as President Bukele and many international supporters had pledged to buy $30 worth of BTC on Tuesday, to show their support for this bold move by the country. The sudden crash in Bitcoin prices was highly unexpected, and Bukele did not hesitate to blame it on efforts by the IMF and the World Bank.
The International Monetary Fund previously opposed Bukele’s decision to make Bitcoin legal tender, on the grounds of macroeconomic, financial and legal issues. Similarly, the World Bank also refused to help El Salvador implement the Bitcoin Law in the country.
When the prices of BTC/USD turned downwards unexpectedly on Tuesday, Bukele and others accused the IMF and the World Bank of manipulating the price, in order to make his policy initiative seem like a failure in the press. However, some analysts offered a different explanation for the sudden decline in the price of the BTC/USD as a mass liquidation of long positions by many investors, to enter the alt-coin market, which has been taking some big hits lately.
Meanwhile, the Mexican crypto exchange, Bitso, has announced that it will be the core crypto service provider for El Salvador’s official BTC wallet, Chivo. On Tuesday, the firm announced that it would assist in launching a state-supported BTC wallet, alongside companies like Silvergate Bank, Athena Bitcoin and Algorand. Furthermore, the Vice President of the payments giant, VISA, revealed the company’s intentions to integrate crypto assets into its platform, for both payments and a store of value. Fernando Teles, the CEO of VISA, Brazil, introduced the concept of adopting tokenized payments and an API designed to bridge the gap between traditional financial institutions and crypto services.
In simple words, VISA reportedly aims to integrate Bitcoin and other crypto payments in Brazil, but not even this news could limit the decline in the prices of BTC/USD on Tuesday.
Bitcoin (BTC/USD) – Technical Outlook
On the technical side, Bitcoin is trading with a dramatic bearish bias, below the 47,574 pivot point level. In the 4-hour timeframe, Bitcoin has formed three black-crow candlestick patterns, suggesting a solid selling bias among investors.
Having said that, Bitcoin is trading at the 45,407 level right now, and it’s heading towards the next support level of 42,195. Having said that, Bitcoin is trading at 45,448 right now, and it’s heading towards the next support level of 42,195. On the bearish side, the breakout at the 42,192 level is likely to lead Bitcoin prices towards the next support level of 37,517.
Daily Technical Levels
Pivot Point: 47,671.0
Looking at the leading technical tools, like the RSI, which are holding in an oversized zone, it shows that investors are exhausted, and soon, we may see the bulls entering the market. The 50-period simple moving average is holding around the 49,437 level, and the closing of candles below this level suggests a strong selling bias in Bitcoin. Thus, the idea is to look for a sell position below an intraday pivot point resistance level of 47,575 to target a 42,150 level.