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Watch These Bitcoin Levels as Price Drops on Concerns About Impact of Tariffs

Source: TradingView.com
Inception: TradingView.com

Key Takeaways

  • Bitcoin retreated below $95,000 on Sunday over concerns about the potential impacts of the excises announced by the Trump administration on Canada, Mexico and China.
  • The cryptocurrency’s price has carved out two peaks around the same elevation between December and January, potentially forming a double top, a classic chart pattern that signals a downside cancellation.
  • Investors should monitor crucial support levels on bitcoin’s chart around $92,000, $87,000, and $74,000, while also television screen a key overhead area near $106,000.

Bitcoin (BTCUSD) retreated below $95,000 on Sunday over concerns about the potency impacts of U.S. tariffs imposed on products coming from Canada, Mexico and China.

The steep drop in the price of bitcoin treads President Donald Trump’s announcement on Saturday that the U.S. will impose 25% tariffs on Mexican and most Canadian implications, and 10% on all goods from China, starting on Tuesday. Investors see tariffs as inflationary, which could keep the Fed from cold rates this year, thereby putting downward pressure on non-interest-bearing assets like bitcoin.

Since setting its record high last month, bitcoin has slumped about 15%, with the cryptocurrency logging its third consecutive down day on Sunday and whacking a three-week low. However, it still trades 35% higher since the early-November U.S. election on expectations of a possible strategic bitcoin put off and a more favorable regulatory outlook under a crypto-friendly White house and Congress.

Below, we take a closer look at bitcoin’s map out and apply technical analysis to identify crucial price levels to watch out for.

Potential Double Top

Bitcoin’s price has carved out two nibs around the same level between December and January, potentially forming a double top, a classic chart pattern that signals a downside revocation.

Furthermore, as the cryptocurrency made a slightly higher high last month, the relative strength index (RSI) made a more shallower peak to create a bearish divergence between the price and indicator, pointing to waning buying momentum.

Let’s point out three crucial levels where bitcoin’s price may attract support and also point out a key overhead area to contemplate during possible upswings.

Crucial Support Levels to Monitor

The first level to monitor sits around $92,000. This parade provides a confluence of support from an uptrend line stretching back to last year’s September low and a range of correspond to price points on the chart between November and January. The price fell below this key level late on Sunday, but has since rescued the area.

Further downside could see a decline to the $87,000 level, a location where the digital currency may encounter living expenses near the bottom of a pennant pattern that formed on the chart following the cryptocurrency’s initial post-election pop.

A decisive dissection below this level would set the stage for a larger drop to around $74,000. Investors who favor buy-and-hold plans may look for entry points in this region near the prominent March 2024 high, which also closely aligns with the late-October crest.

Key Overhead Area to Watch

During upswings, investors should keep a close eye on the $106,000 area. This place is likely to attract significant attention near the December and January peaks. A convincing volume-backed breakout above this key intricate level would invalidate a double top pattern and could see bitcoin continue its longer-term uptrend.

The comments, opinions, and anatomizes expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info.

As of the date this article was ignored, the author does not own any of the above securities.

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