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The price of Bitcoin could nosedive to as low as $26,000 if a "bearish flag" technical pattern plays out, according to a recent Bloomberg report.
The largest cryptocurrency has had a rough start to the week, plunging below the $40,000 level for the first time since mid-May on Monday.
According to a report by Coinglass, roughly $439 million worth of cryptocurrencies has been liquidated over the past 24 hours, with long positions accounting for 88.03% of the wipeout. Traders of Bitcoin futures parted ways with $160.19 million.
The Federal Reserve's hawkish U-turn has reignited the dollar rally while simultaneously exerting pressure on risk assets of the likes of Bitcoin. The U.S. dollar index (DYX), which measures the strength of the greenback relative to a basket of foreign currencies, recently spiked above 100, hitting a fresh two-year peak. The U.S. stock market also closed in the red on Monday, with the benchmark Dow Jones Industrial Average index falling 1.89%.
According to the report, Bitcoin may now be on track to test a pivotal support level of around $37,500. A failure to find any footing here could prove to be disastrous for bulls.
At press time, Bitcoin is trading at $40,121, struggling to recover after recording a string of substantial losses. It is down 41.81% from its record peak.
Oanda’s Jeffrey Halley told Bloomberg that the largest cryptocurrency keeps trading within the established range, whose lower boundary is fixed at $36,500. If Bitcoin breaks below that level, it will likely lead to significant losses. Conversely, if Bitcoin soars above the upper boundary of $47,500, a new record high could well be within reach, according to Halley.