The Bitcoin (BTC/USD) price retreated on Monday as sentiment in the cryptocurrency industry worsened. The coin’s price declined to $44,000, which was the lowest level since September 7. It has fallen by more than 17% from its highest level this month.
Bitcoin momentum loses steam
Bitcoin staged a remarkable comeback between back between July and early this month. During this time, the price rose from below $30,000 to more than $52,000. This rally was mostly because of the strong buying the dips as the price struggled moving below the key support at $29,500.
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The ongoing sell-off accelerated after El Salvador made Bitcoin a legal tender last week. As a sign of confidence on the currency, the government decided to buy Bitcoin worth more than $20 million. This made it the first country in the world to have Bitcoin in its treasuries. Therefore, after buying El Salvador’s rumours, investors sold the news after it was confirmed last week.
The sell-off in Bitcoin price happened at a time when the US dollar has held relatively stable against other currencies. The dollar index, which measures the performance of the currency against other currencies, has risen to $92.70, the highest level since Wednesday last week.
The strength of the US dollar happened as investors waited for the latest inflation data scheduled for Tuesday. The data is expected to show that consumer prices remained above the Federal Reserve target of 2.0%. Therefore, the performance of the US dollar will likely remain as investors eye the Fed interest rate decision scheduled for later this month.
Meanwhile, on-chain data on Bitcoin are not all that encouraging. The numbers shows that the number of Bitcoin addresses has started to decline, which is a sign that many traders have started exiting. Similarly, the total fees paid within the network has dropped, signalling that activity has declined.
Bitcoin price forecast
The daily chart shows that the Bitcoin price broke and retest the key resistance level at $41,115 level in August. This was an important level where it had struggled to move above several times before. After the bullish breakout, the coin rallied to a multi-month high of $52,000.
Now, it has turned around and moved slightly below the 25-day and 50-day exponential moving averages. It has also formed a bearish flag pattern. Therefore, there is a likelihood that the coin will keep falling as bears target the key support at $41,115. In the longer term, however, the price will likely resume the bullish trend.
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