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The recent price rally appears to be facing headwinds. After rising significantly for much of the past year, the world's leading cryptocurrency has seen a decline in recent days.
This decline comes amid a slowdown in inflows into Bitcoin exchange-traded funds (ETFs), which had previously been a key source of upward pressure. The pullback intensified over the weekend and coincides with a rise in geopolitical tensions.
These global uncertainties have traditionally led investors to seek safer havens, potentially causing some to turn away from riskier assets like Bitcoin.
LunarCrush analyst Joe Vezzani told Investing.com that “Bitcoin and other cryptocurrencies often see outsized reactions to breaking news on weekends before traditional markets open.”
“While the initial reaction can be significant, these moves in the past are often reversed once investors have time to fully digest new information,” he explained.
Additionally, Vezzani highlighted the growing maturity and resilience of digital asset markets, which are “absorbing geopolitical shocks more and more efficiently.”
“Bitcoin in particular is cementing its status as an indicator of investor sentiment and an important indicator to keep an eye on when unexpected events rock global markets,” he added.
Still, it is important to consider this decline in the context of Bitcoin's historical cycles. The cryptocurrency is known for its halving events, which occur approximately every four years and significantly reduce the amount of new Bitcoins entering circulation. This programmed scarcity has been a key driver of price increases in the past.
However, the post-halving period may also see periods of consolidation or correction as the market adjusts to the reduced supply. This cyclical nature of Bitcoin price movements provides a sense of stability and predictability, helping investors make informed decisions.
Fairlead Strategies expects a deeper Bitcoin price decline
In a note to clients this week, investment research analysts at Fairlead Strategies said the recent decline in Bitcoin price could see the price move towards support at $57,800.
“Given [the] Due to increased near-term risk, we expect weekly stochastics data to confirm its downturn into a medium-term pullback,” the company said. “This justifies a shift towards a neutral medium-term stance with cloud-based support intact.”
However, there is also a possibility that the price of the leading cryptocurrency will continue to decline. Fairlead expects that if the cloud indicator fails to hold, secondary support will be near the $51,500 level, defined by a 38.2% Fibonacci retracement of the cyclical uptrend.
However, Fairlead clarifies that in their view, given the recent breakout above the 2021 high, the pullback is merely a break in Bitcoin's uptrend and not the start of a bearish reversal. Therefore, they see a long-term target of $80,600 in play.
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