On Tuesday, the world’s largest crypto by market capitalization continued its quest into consolidating above the $23,000 margin.
The asset spent the previous six months below that margin, and since its significant growth in January, bitcoin is attempting to break another milestone and return to trading above that resistance line.
BTC started off the day trading at around $23,130. For most of the day, the asset traded sideways as buyers refused to let the price go down. Ultimately, around 4 PM EST, bitcoin suffered a 2.5% decrease, going from $23,023 to trading at around $22,457 at this time of writing.
That means that the currency is likely going through a retraction period, a completely normal event that happens when an asset becomes “overbought”. In addition, the cryptocurrency market is not exactly favorable for digital assets at the moment.
With the impending bankruptcy of one of the world’s largest crypto-lending firms, Genesis, eventually, the crypto market would see an effect in its price.
However, those are not exactly bad news for bullish investors. If the currency is indeed going through a retraction period, analyzing what is the asset’s new bottom is crucial for trying to predict the future of BTC.
If the currency is able to consolidate around the $22,000 margin, upcoming favorable news could lead $BTC to go through the $23,000 within hours.
Bitcoin Is Still Above The 200-Day Moving Average
Despite the most recent retraction, the market-leading crypto is still officially in a month-long bullish trend.
The asset’s price still trades above the 200-day exponential moving average. When that happens, that generally indicates that the asset is in an upward trend.
However, it is clear that the currency’s momentum is not as strong as it was a couple of days ago. Despite still being above, the charts begin to indicate symptoms of exhaustion.
What Caused The Retraction?
The most likely reason for the halt in bitcoin’s momentum is the announcement of the court date for Grayscale Vs. SEC lawsuit.
Grayscale, a digital asset management company that offers investment products that provide exposure to cryptocurrencies such as Bitcoin and Ethereum, filed a lawsuit in mid-2022 against the SEC after the government denied its application to convert its bitcoin trust, GBTC, into an ETF.
After the SEC authorized ProShares’ futures-based bitcoin ETF in October 2021, the business opted to pursue the ETF, which would be backed by bitcoin rather than bitcoin derivatives.
The outcome of the lawsuit could have a major negative impact on the crypto world. Only a week after the Genesis bankruptcy, another DCG-linked company, Grayscale, will have it’s future decided by the result of the lawsuit.
In the case that the entire ordeal goes south, the crypto market could experience a major market crash if another DCG company takes a hit.
