It looks like the bulls fizzled out after pushing the Bitcoin price above $40000. The closer the price of Bitcoin approached the $42000 mark, the less strength remained for the bulls. After the bulls managed to raise the price of Bitcoin to $42532, it began to fall. And yesterday, the price of Bitcoin fell below $40000 again. At the time of publication, the BTС/USD pair is trading around $38600.
Thus, the BTC/USD pair dropped below the upward range that it had been forming since the end of July on the 4 hours chart. However, despite this decline, the price of Bitcoin is still showing 13% monthly growth.
The new drop in the price of Bitcoin can be attributed to several factors. First, investors are so far refraining from active trading, since the price does not form a clear trend. Thus, the bulls are not getting enough support. Secondly, the vague law on taxation of cryptocurrencies does not outline a clear circle of persons who will have to pay tax. Thus, some analysts say the US government can come to taxpayers whenever it wants. The bill has yet to be passed by Congress, and industry officials are doing everything they can to keep it from getting through.
Third, Saudi Aramco has denied rumors that the company is going to start mining Bitcoin. It also dampens the bullish sentiment around Bitcoin.
In South Korea, the Financial Services Commission has closed about 12 mid-tier exchanges over allegations of fraud. It also negatively impacted the cryptocurrency market.
The price drop below $40000 made the Bitcoin outlook neutral again. For a bullish forecast, the price should rise above $42000. On the other hand, a price drop below $30000 will make the short-term outlook for Bitcoin bearish.
As the BTC/USD pair dipped below the $39450 support level, we expect a move towards the next $38000 support level. In case of a breakdown, the BTC/USD pair will go to the $37000 area.
On the other hand, the first resistance is again at $40000. Further, we see resistance at 40,560 and 42,560 dollars, which the pair has not yet managed to overcome.