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Bitcoin attempts to get back on track after pullback

Bitcoin is still struggling to recover from last weekend’s 15.8% decline to $50,931. During the downturn, long positions in Bitcoin worth $4.87 bln were forcibly liquidated on eight trading floors, including those on the Binance exchange valued at $1.97 bln. The daily volume stood at 124,880 BTC (less than in February 2021). The price action bounced 10.2% to $56,150 on the day.

The triggers for the pullback maybe have been two media reports:

  • Rumors that the US Treasury Department may soon accuse a number of financial institutions of using digital assets for money laundering;
  • The BTC hash rate cratered 40% due to a massive power outage in the Chinese province of Xinjiang.

At the time of writing, Bitcoins were exchanging hands at $55,865. Sellers were unable to push the price action below $50,427 (March 25 low). According to technical analysis, the uptrend has weakened, but is not broken. The crypto market is supported by positive news. Losses will be pared at $53,350.

Positive news

  • PayPal's Venmo payment service has added support for Bitcoin, Ethereum, Litecoin and Bitcoin Cash;
  • The Nasdaq is set to list options contracts for Coinbase;
  • US news magazine TIME magazine has partnered with Crypto.com and is now accepting cryptocurrency as a payment method for digital subscriptions;
  • For the first time, the Central Bank of China called Bitcoin an investment instrument. Deputy Governor of the PBOC Li Bo referred to it as an “investment alternative”. The regulator does not regard bitcoin and other cryptocurrencies as currencies per se, so this is why they assigned them a role in the investment sphere.

Current outlook

The price action has recouped 50% of the decline from $64,854 to $50,931. Buyers are left licking their wounds after the forced liquidation and stop order slippage. They should be expected to jump back in after the price action rises above $58,600. If BTC keeps trading below $58.6k by 10:00 UTC on April 21, then players should get ready for a drop to the $50,931 low. Positive factors include a weakening of the dollar across the board on FX markets amid upside in equity indices, with the S&P 500 retracing to its all-time high of 4,170.75.

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