Bitcoin dips 3.6% from weekly highs - What are the key BTC price levels to watch?

Bitcoin price action hovered just below short-term support levels after a week of highs. The pair (BTC/USD) was down, threatening a substantial retracement the night before.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

BTC misses out on “very bullish” daily close

The price of bitcoin tumbled below the $6,000 mark on Monday, according to data from Coindesk Markets Pro and TradingView. BTC/USD dropped from a high of $43,337 on Bitstamp to lows of $41,779 before recovering.

At press time, the pair was trading at roughly $42,300 —a little more than $1,000 below the peak.

On Tuesday, thanks to growing attention on the Blockchain protocol Terra’s apparent $3-billion BTC purchase, enthusiasm was readily apparent.

Do Kwon, co-founder of Terra, said that although the company had raised more than $30 million in promises to back its new USD (UST) stablecoin, the majority of the funds had not been acquired yet, leaving further potential BTC price squeezes.

Nonetheless, the market fell into a negative mood at night, with Bitcoin missing what would have been a “extremely optimistic” daily high of around $200.

The tide was turning, according to Analyst Matthew Hyland, but he also noted an ongoing breakout attempt for Bitcoin’s daily relative strength index (RSI).

It has been in a downtrend since before the all-time high set back in November.

BTC/USD with RSI annotated chart. Source: Matthew Hyland/Twitter

Often, the $50,000 mark is treated as a critical price level to break through. For example, Trading Credible Crypto noted a comparable price level of $42,500 as crucial to change.

“42.5k has been broken, now want to see this level established as support if this is a true breakout,” he wrote in a Twitter update on the day.

“Meaning, the move up should hold and want to see some consolidation above this level for continuation. Let’s see what we get over the next day or two.”

The European Central Bank has just announced a new balance sheet record.

On the whole, news that Thailand has banned cryptocurrency for payments gave an unpleasant mood from Asia, while the European Central Bank’s (ECB) balance sheet hit fresh highs in Europe.

The European Central Bank’s (ECB) quantitative asset-purchase program has grown to more than 8.7 trillion euros ($9.59 trillion), according to Holger Zschaepitz, a market commentator for Spiegel Online and the International New York Times. “The sky’s the limit” for ECB asset purchases, Zschaep

“Only the sky is the limit? ECB Balance Sheet has hit fresh ATH >€8.7tn. Total assets rose by another €13bn as ECB keeps buying bonds despite record-high,” he summarized Wednesday alongside a chart from Bloomberg Terminal.

“Eurozone inflation. Balance Sheet now equal to 82% of Eurozone GDP vs. Fed’s 37%, and BoJ’s 136%.”

ECB balance sheet chart. Source: Holger Zschaepitz/Twitter

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