Bitcoin has been oscillating around the $20,000 figure these days after a brief plunge to late-2020 lows in the $17,600 area over the weekend. Despite the selling pressure easing, the largest cryptocurrency by market capitalization looks set for more losses as recovery attempts look too modest and indecisive.
On Tuesday, the BTC/USD pair encountered a local barrier around $21,700 to finish below $21,000. Today, the coin struggles to rebound around the $20,000 mark that remains in the market focus. The digital currency was last seen shedding 2.5% on the day. Last week’s failure to hold above the psychological support triggered a further deterioration in the near-term technical outlook for Bitcoin and other cryptocurrencies.
Against this backdrop, market participants expect BTC to drop beyond the $20,000 level, with a $13,000 key support area coming into the market focus, as digital assets tend to follow dynamics in traditional financial markets this year. In turn, Wall Street indices have entered the bearish territory and stay vulnerable to deeper losses as investors continue to express concerns over inflation, economy, and central banks’ aggressive tightening measures.
Despite the world’s biggest token having stabilized, the broader crypto space is unlikely to get rid of its volatility any time soon, especially as traditional markets remain shaky. On the other hand, the potential selling pressure could eventually ease should signals of seller exhaustion emerge over the coming weeks.
In the immediate term, BTC/USD needs to hold above $20,000 on a daily closing basis to avoid another plunge. However, the path of least resistance remains to the downside so far.