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Bitcoin drops to lowest level since September; finds support at $41K

© Reuters.

By Samuel Indyk

Investing.com – Bitcoin dropped to its lowest level since 29th September on Friday morning as the prospect of tighter policy from the Federal Reserve continues to weigh on cryptocurrency prices.

The minutes from the Fed’s December meeting, released on Wednesday, showed the central bank is concerned about high inflation and paved the way for earlier than expected rate increases and balance sheet run-off.

“Some participants […] noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes showed.

The Fed is expected to begin hiking the FFR as soon as March, suggesting that balance sheet reduction could begin from Spring.

Bitcoin technical view

After trading near $69,000 as recently as November, Bitcoin traded over 40% below that level on Friday morning.

After breaking below the “flash crash” low from 4th December, Bitcoin found support at $41,000.

A move below that level could open the door to the psychological $40,000 level. The September low comes in near $39,650.

“A close below the $42,000 level will increase the chances of another bearish move, while a close below $40,000 will reinforce bearish entrenchment,” Investing.com analyst Pinchas Cohen said in a research piece on Thursday.

To the upside, the first immediate resistance could be the $45,500-45,800 zone which acted as support in December throughout the move lower.

Above there, the 200-day moving average at $48,100 could next act as resistance.

It is worth noting that the 50-day moving average is rapidly approaching the 200-day moving average. When a lower timeframe moving average crosses below a longer timeframe one, it is known as a ‘death cross’ and often indicates a bearish trend.

Other cryptocurrency news

Elsewhere in cryptocurrency land, GameStop (NYSE:GME) shares surged higher in pre-market trade on Friday after reports that the company is to launch a marketplace for nonfungible tokens (NFTs) and is in discussions with cryptocurrency companies about which tokens could be used. The Wall Street Journal reported that Gamestop has recruited a team of over 20 people to focus on the push.

One cryptocurrency that is performing well on Friday is Decentraland, which has surged over 12% in the last 24 hours. The surge comes despite a decline in other cryptocurrencies as Samsung (KS:005930) announced on Thursday it is opening a virtual version of its flagship store in the network’s metaverse.

“It’s a blockchain-powered virtual space, where you can buy and sell exclusive digital assets, like land and wearables,” Samsung said in a statement.

Bitcoin drops to lowest level since September; finds support at $41K

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