Sharp Decline Tests Key Support
This past week, Bitcoin endured a harsh sell-off as risk appetite evaporated across global markets. The flagship cryptocurrency plunged by more than 10%, slipping under the $26,000 mark and breaking below its 200-day moving average for the first time in months. This breach of technical support has alarmed traders who view the moving average as a critical floor for further upside.
Technical Breakdown
On multiple daily charts, Bitcoin formed lower highs, reinforcing the view that bears have regained control. The Relative Strength Index (RSI) dipped into oversold territory, yet previous rebounds from similar levels failed to spark a sustained rally. Volume spiked on sell orders, confirming that long-term holders were unwilling to defend positions around the $26,500 area.
Market Impact and Reaction
The weakness in Bitcoin spilled over into the broader crypto sector. Ether, the second-largest token, slid by nearly 12% as decentralized finance tokens and major altcoins mirrored the drop. Stablecoin circulation ticked upward as investors sought refuge from volatility. Miners, facing squeezed margins at lower spot prices, hinted at offloading reserves if the price fails to recover soon.
Outlook for Next Week
All eyes now turn to U.S. inflation data and the Federal Reserve’s policy minutes, which could set the tone for risk assets, including Bitcoin. A softer Consumer Price Index print might offer relief and spark a technical bounce toward the $28,000 zone. Conversely, hawkish commentary could push the market toward a deeper correction, potentially testing support near $24,000. Traders will also monitor on-chain metrics for signs of capitulation or renewed accumulation.