As long as the prices stay above the $37,000 critical support, the downside potential looks limited
Following a three-day winning streak, the bitcoin price came back under pressure on Thursday, extending the retreat today. The BTCUSD pair peaked at $41,700 before correcting lower as sellers reemerged following a short-lived rally in the cryptocurrency market. Still, the coin is holding above the $40,000 figure, strengthened by the 20-DMA.
The recent ascent in cryptocurrencies came along with recovery in the traditional financial markets, with Asian equities rallying strongly after Chinese authorities pledged to support its real estate and technology industries. Also, cryptos reacted to the reports that Ukrainian President Volodymyr Zelenskyy signed into law a bill that legalizes crypto in the country.
Now that bitcoin regained the $40,000 level, it needs to stay afloat in order to confirm the latest breakout. Otherwise, the selling pressure would intensify in the coming days, with the overall sentiment in the market staying unstable. In a bearish scenario, the most popular digital currency could retarget the $37,000 figure that capped the selling pressure earlier this month and in late February. As long as the prices stay above this critical support, the downside potential looks limited.
In the immediate term, the technical picture suggests the BTCUSD pair could struggle for direction around $40,000, with the overall tone looking neutral in the shorter-term timeframes. On the upside, the descending 100-DMA, currently at $42,400, continues to act as the key resistance for BTC. Should the prices finish above $39,000, it will close the week in the positive territory.
In the coming days and weeks, cryptos will likely continue to follow the trend in the traditional equity markets as geopolitical tensions between Russia and Ukraine continue to persist. According to the latest reports, Ukranian presidential aide said talks with Russia are progressing slowly. In turn, Kremlin noted that the Ukrainian delegation hasn’t shown willingness to speed up negotiations.