Bitcoin (BTC) failed to hold short-term support at $40,000 as sellers maintained the two-month long downtrend.
Intraday oversold signals were not enough to sustain bids, which means longer term indicators are more reliable to determine bitcoin’s price direction.
BTC was trading around $38,000 at press time and is down about 10% over the past 24 hours.
The slowdown in upside momentum on monthly and weekly charts has been a persistent theme since December. As the long-term uptrend weakens, sellers typically outweigh buyers despite occasional oversold signals.
Further, when drawdowns (percent decline from peak to trough) become severe, short-term traders tend to reduce their position sizes and tighten trade parameters around intraday support and resistance zones.
Bitcoin is roughly 40% below its all-time high of $69,000, which is a significant drawdown. The previous drawdown extreme was in July when BTC settled near $28,000 after falling roughly 50% from its peak.
For now, initial support is around $37,000, which could stabilize the current sell-off. The relative strength index (RSI) on the daily chart is the most oversold since May 19, which preceded two months of sideways trading before a rebound occurred.
If selling pressure accelerates over the next week, BTC could find stronger support around $30,000.