Analyst: Swing Trading Is the Best Move as BTC Price Drops Below $40,000

Bitcoin (BTC) price was briefly bullish, possibly tempting some traders to go long, before falling back below $40,000 during the evening trading hours. Let's take a quick look at what traders think of the current price action and whether yesterday's brief breakout was just a test of overhead resistance.

Resistance remains at key moving averages

Crypto trader and anonymous Twitter user "Rekt Capital" discussed his analysis of Bitcoin's weekly price action, posting the following weekly chart, noting that "Bitcoin is now hovering between a green 21-week and a blue 50-week bullish index below the moving average (EMA)."

Rekt Capital says:

“There has been significant upside ahead of the break above these EMAs. Turn these bullish EMAs into support and we will see a return to bullish momentum.”

Bitcoin's correlation with tech stocks offers insight

David Lifchitz, managing partner and chief investment officer of ExoAlpha, said that despite all the macro factors affecting global financial markets, Bitcoin is still "stuck in the $35,000 to $45,000 range." Lifchitz noted that BTC is behaving more like a risk asset than an inflation hedge.

Evidence of this can be found by looking at the highly correlated price action of BTC and Nasdaq over the past few months.

According to Lifchitz, if Bitcoin's "correlation with speculative tech stocks remains high," the Fed's planned series of rate hikes will at some point "hurt risky assets," which could lead to a rise in Bitcoin prices. of fall.

Overall, Lifchitz advises investors who believe in Bitcoin’s long-term potential “to trade aggressively when it moves up and down in a range.”

$42,300 is a key level to watch

According to independent market analyst Michaël van de Poppe, $42,300 is a key level to overcome.

van de Poppe said:

"It's also a day-to-day problem. If it breaks, I'm assuming $46,000 for a new test is coming, maybe $50,000."

Further evidence that BTC could soon be headed higher has been provided by analyst and anonymous Twitter user "Plan C," who posted the following chart, observing the confluence of several analytical indicators for Bitcoin's price.

"Plan C" says:

“The first 4 times the blue and purple lines are below the green line, Bitcoin has bottomed out.”

The total market capitalization of cryptocurrencies is currently $1.881 trillion, with Bitcoin dominance at 41.2%.