Bitcoin approaches major support

Bitcoin took a hit yesterday as reports of Ukrainian troops and pro-Russian separatists exchanging fire in eastern Ukraine increased appetite for safe haven assets like gold at the expense of crypto and stocks. At the start of Thursday trading, the digital currency dropped from the $42,000 price mark and downbeat moods also prevail today. The anxiety in the markets is also triggered by the expected Fed’s rate hike. The tightening of monetary policy is taken as a negative factor for the equity market. Given the strong correlation between stock indices and cryptocurrencies, potential increases in interest rates do not support the price of Bitcoin and other major projects. 

While a growing trend of institutional investors adding crypto to their holdings since the beginning of the pandemic has legitimized Bitcoin as an asset, however it still cannot be considered as safe haven similar to gold as it continues to follow growth-sensitive assets like stocks. Therefore many analysts foresee more pain for cryptocurrencies if the geopolitical tensions escalate. 

Bitcoin fell over 7% to $40,500 on Thursday, registering its largest single-day decline since Jan. 21. Currently the price is approaching psychological support at $40,000 which is marked with a lower limit of the 1:1 structure and 200 SMA (red line). Should break lower occur, downward move may be extended to the support at $38,000, which coincides with 78.6% Fibonacci retracement of the upward wave launched in July 2021 or even $33,000 handle where lows from January 2022 are located. On the other hand, if buyers will manage to regain control, another upward impulse towards $41,500 may occur. Source: xStation5