The cryptocurrency market has been underperforming since the start of the month, and Bitcoin could record further losses soon.
The crypto market has lost more than $1 trillion over the past two months. Bitcoin reached an all-time high of $69k in November. However, it has been underperforming since then.
The total cryptocurrency market cap reached an all-time high of $3 trillion in November, with Bitcoin and Ether setting new all-time highs during that period. However, the bears have been in control of the market ever since.
Bitcoin is down by more than 40% from the all-time high it achieved two months ago. If the current market conditions remain unchanged, BTC could lose its $40k support level over the coming hours.
Central banks are increasing their interest rates again, and market experts believe this trend is affecting the cryptocurrency market. The crypto space enjoyed an influx of funds during the pandemic as central banks slashed interest rates and issued bailout funds in a bid to counter the negative economic effects of Covid-19.
However, with economies slowly reopening, central banks are adjusting their rates, and it is affecting the capital influx coming into the cryptocurrency market.
Key levels to watch
The BTC/USD 4-hour chart is looking bearish at the moment as Bitcoin is currently underperforming. At press time, BTC is trading at $41,689, down by 1.6% in the last 24 hours. The technical indicators show that BTC could record further losses in the coming hours.
The MACD line is below the neutral zone as BTC has faced selling pressure in the past couple of weeks. The RSI of 45 shows that Bitcoin could soon enter the oversold region if the market conditions don’t improve.
If the bears remain in control, BTC could lose the $40k support level and trade below $40,000 for the second time this year. Unless there is an extended bearish performance, the second major support level at $38,965 should cap further downward movement in the short term.