Bitcoin has been dropping gradually in recent days after it lost momentum, with traders disregarding the influence of institutional adoption. BTC continued to slide over the weekend and is now down around 18% month-to-date. The crypto approached initial support of around $42,000 that was expected to stabilize the sell-off.
The latest sell-off comes after Elon Musk said through Twitter that Tesla might be offloading its BTC holdings in Q2 2021. His comments resulted in a massive Twitter war from the crypto community, which prompted the Tesla executive to clarify that the electric vehicle maker has not sold any of its bitcoin holdings yet.
Currently, the crypto market seems to be dominated by the bears, and recoveries remain limited. Sellers seem to be in control as shown by several months of slowing momentum. At the time of writing, the flagship crypto is trading above $44,000, with the buyers looking determined to push it back up towards $48,000.
The relative strength index (RSI) on the daily chart appears to be oversold similar to April 25 that preceded a near 20% price recovery. Currently, bitcoin is below the 100-day moving average that is now a major resistance at $54,000. Nevertheless, bitcoin might face some resistance at $50,000 as the uptrend weakens.
If the $42,000 support is broken, the next support level is seen at $34,286, which is roughly a 50% retracement of the March 2021 bottom. Bitcoin appears to be in a consolidation phase after it failed to sustain moves above $64,000.
Hence, an intermediate-term bullish to bearish trend reversal is something the analysts and commentators are watching keenly, mostly with the sell signals appearing on the weekly chart.