Bitcoin reveals a new test

After the record-breaking Bitcoin bull market run that began to gain traction during 2020, with stay at home individuals during the lockdown measures laid out in various countries, cryptocurrencies have been in a continued downtrend since April 2021 record highs with Bitcoin itself running out of steam to break the USD$65,000 mark and sharp sell-offs ensuing in May the following month.

The culmination of banning crypto mining & usage in China (in comparison to the encouragement of the digital-Yuan) amongst a string of other developments for bans or further possible unmeasured and unknown regulation for jurisdictions, yet to have a review of crypto's place in local monetary policies, caused a lot of headwinds for the alternative asset class.

(Photo by André François McKenzie/Unsplash)

A lot of alternative coins or "altcoins" have all followed a similar pattern to Bitcoin's turbulent swings since entering a bear market in May 2020 and it is quite evident that Bitcoin's dominance still continues in the cryptocurrency space. Bitcoin itself can be seen as an "index" of sorts for the alternative coin offerings to follow including Etherium as well as the "majors", like major indices in traditional markets, with any cryptos linked to these dominant technologies surely to follow the same fluctuations.

New overhead resistance had formed around USD$40,000-41,000 mark and bottom support trying to hold around USD$30,000-29,000, with 3 tests of these lower support levels with some vicious breakthroughs of these support levels to test how low it will try to drag down to solidify possibly what may be the new trend to be set for cryptocurrencies. The best way to analyse Bitcoin is also in the original fiat currency form of US dollars where the technical analysis on resistance and support numbers truly lay - not in other currency pairings to value Bitcoin.

The real questions posed to the cryptocurrency market are:

• Is this a test to the lower channels where supply may sit possibly USD$30,000-$19,000?

• Will there be price consolidation before trying to break through USD$41,000 for somewhat of a confirmation north again to possibly test USD$65,000?

• Can this cause some sideways Bitcoin movements to give altcoins some breathing space to move and maybe cause more gains or even a breakthrough? (unfortunately, this has not been the case in the recent movements)

• Could this lose the floor with support and also possibly affect traditional markets or are the indices now immune to large amounts of volatility played out on cryptos?

It may be another month or two until the answers to those questions reveal themselves and until then we all currently sail in unchartered waters.