BITCOIN RESUMES DOWNWARD TREND AS SENTIMENT FALLS
Over the past few weeks, the price of Bitcoin has fallen sharply to the lowest level since 2017. After attempting to gain a week ago, the price started to decline once again and today, reached an intraday low of $3733. The combined market capitalization of cryptocurrencies has declined to about $125 billion. A month ago, the value of these currencies was above $230 billion.
Among traders, there is fear that the ongoing price decline is making digital currencies worthless. The argument is that as the price drops, so does the level of unprofitability among miners. While the average cost of mining a Bitcoin is not known, estimates place it at more than $4,000. Therefore, at the current prices, it means that most miners are operating at a loss.
Unlike stocks and bonds, Bitcoin does not have any yield. Therefore, its value is derived from the anticipation of future use. As a result, it can be closely equated to gold, which is usually seen as a store of value. Those investing in Bitcoin are doing so in the hope that the price will move up.
The BTC/USD pair is trading at the 3804 level, which is below the short and longer-term EMAs on the four-hour chart below. The RSI has fallen from 60 to the current 38, while the momentum indicator has fallen sharply. Therefore, it is likely that the BTC/USD pair will continue moving lower as sentiment falls.