Bitcoin (BTC) consolidated under $40,000 on April 23 as market expectations favored further losses.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
“Extreme fear” accompanies Bitcoin’s descent to $39,200
Data from Cointelegraph Markets Pro and TradingView followed a bearish BTC/USD after the pair touched $39,200 on Friday’s Wall Street open.
Falling in line with stocks, Bitcoin now faced the prospect of resistance cementing itself at the $40,000 mark, with traders showing their lack of confidence in a short-term rebound.
Data from on-chain analytics site Coinglass confirmed that funding rates across derivatives exchanges were firmly negative into the weekend, suggesting that the majority of market participants expected shorting to be a profitable next trade.
BTC funding rates chart. Source: Coinglass
For analyst Filbfilb, co-founder of trading suite Decentrader, the ratio of long to short positions was a furthe cause for concern.
Price at $47k:
– LS ratio was 1:1
Price at $39.5k:
– LS ratio = 3.5
Ruh-oh. https://t.co/Pazhwgj5vr
– filbfilb (@filbfilb) April 22, 2022
“Bitcoin back on this crucial level here. Losing this -> $36K seems next,” Cointelegraph contributor Michaël van de Poppe added in a fresh Twitter update on the day.
BTC/USD circled $39,800 at the time of writing, having avoided a trip to take buy liquidity below $38,000 so far.
Cold feet among traders was meanwhile echoed in sentiment gauges, with the Crypto Fear & Greed Index heading back into the “extreme fear” zone on Saturday.
Crypto Fear & Greed Index (screenshot). Source: Alternative.me
DXY resistance sought for BTC trend break
Despite the lack of confidence, not everyone was interested in abandoning their faith in Bitcoin beyond the short term.
Related: Nasdaq has dotcom crash ‘deja vu’ says trader as Bitcoin correlation rises
“Prepare yourself for the next runup. Historically speaking, this has been one of the best ranges for buying Bitcoin!” popular YouTuber Crypto Rover argued alongside a chart comparing Bitcoin price performance to the strength of the U.S. dollar.
U.S. dollar currency index (DXY) vs. BTC/USD annotated chart. Source: Crypto Rover/ Twitter
As Cointelegraph reported, the U.S. dollar currency index (DXY) is currently near two-year highs, and a reversal has historically given Bitcoin the fuel to crack long-term downtrends.
U.S. dollar currency index (DXY) 1-week candle chart. Source: TradingView
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