Bitcoin has had an eventful 2022 so far and it is only two months into the year. While mostly recording downtrends in these past two months, there have been some notable recoveries that have put it above $40K. For the two previous times, the digital asset had been unable to hold above this level. Will the third time be the charm or is a reversal expected soon?
Bitcoin Trading Between $40K-$44K
On Monday, bitcoin had pulled one of its strongest reverse cards and had broken straight through $40,000. The digital asset did not stop there though, continuing the run until it had finally peaked at $44K. This marked the third time that the cryptocurrency had broken above this point for the year, but these three recoveries, while similar in their peak points, have been through different circumstances.
Related Reading | Short Traders Decimated As Bitcoin Barrels Past $43,000
Each time, the digital asset has met significant resistance at $44,000, making it the level to beat for each rally. Even though bitcoin had managed to break above this point both times, it had never really held through. And this was the case with the Monday rally. After touching above $44K, the digital asset had recorded a small downward reversal that put it back in the $43,000 range.
BTC falls below $44K | Source: BTCUSD on TradingView.com
Nevertheless, bitcoin has put up a good fight the third time around and has once again broken above $44K. It still remains weak at this point though, meaning that it is still very well in the territory where bears can easily pull it back down.
What Happens From Here?
Well, there are various possibilities for the price of bitcoin. Even with the recent rally, momentum continues to be low as crypto investors have slowed down their activities. Depending on where the digital asset closes today, it could either be the continuation of the rally or another reversal down below $40K.
If BTC is able to hold above $44K, say support at the 50-day moving average does not wane or waver, then the very next rally will see bitcoin touching as high as $47K. There are still resistance points on the way to this price level but none are as strong as the $44K resistance point, making it an easy break for the digital asset.
BTC movement unclear from $44K | Source: Arcane Research
On the flip side, this rally could very well turn sour as quickly as it started. If bitcoin ends up losing support at both $44K and the 50-day moving average, then the decline could send it towards $40,000. The only difference this time around is that the $40K resistance point has been flipped and will most likely act as a support level. Although not as strong as previously found in the $36K-$38K point.
BTC is trading above $44,100 at the time of this writing. It’s all green candlesticks at this point as investor sentiment shifts to the positive.
Featured image from Financial Synergies Wealth Advisors, charts from Arcane Research and TradingView.com