Bitcoin (BTC) is currently trading beneath critical support levels following extensive selling pressure that has sparked fear and uncertainty among investors. Since early March, BTC has seen a decline exceeding 19% in value, raising alarms about the potential for further downturns. The broader cryptocurrency market alongside the U.S. stock market has also faced challenges due to worries surrounding a global trade war and unstable macroeconomic conditions, which have contributed to diminished investor confidence.
Despite the ongoing downtrend, Bitcoin’s market dominance has been steadily increasing since 2022, marking one of the longest phases of uninterrupted growth in its history. This dominance showcases BTC’s strength relative to altcoins, with investors gravitating toward BTC amid times of uncertainty. However, it’s worth noting that even as Bitcoin’s market share expands, active user engagement is on the decline.
On-chain analytics reveal that Ethereum (ETH) and The Open Network (TON) have experienced substantial growth, with an increase in on-chain activity migrating toward these networks. As other Layer 1 blockchains gain prominence, Bitcoin is confronted with competition for transaction volume and user participation. With BTC unable to maintain crucial levels, the upcoming weeks will be pivotal in determining whether Bitcoin can regain momentum or if it faces further losses.
Bitcoin’s Downtrend Persists While Market Dominance Increases
Since late January, Bitcoin has been caught in a continual downtrend, with fear and uncertainty influencing the market’s decline. Many investors are starting to believe that the bull cycle has concluded as BTC struggles to hold crucial support levels, leading to lower targets with each successive wave of selling. The bulls seem to have lost control, and clear signs of robust support are absent, leaving the market anxious and pessimistic regarding its short-term prospects.
Despite the correction, Bitcoin still outshines altcoins, securing its position as a dominant force in the crypto landscape. Relative to other high-risk assets, BTC remains a safer choice, especially as capital shifts away from more volatile tokens. Insights from IntoTheBlock on X indicate that Bitcoin’s market dominance has been on a steady incline since 2022, representing one of the most extended periods of growth on record. This shows that even amid selling pressures, BTC remains the central powerhouse in the crypto environment, with a preference among investors for BTC over alternative assets.
However, while Bitcoin’s market dominance is on the rise, its number of active users is decreasing. There is a noticeable shift of on-chain activity toward Ethereum and other Layer 1 networks, such as The Open Network (TON), suggesting that users are exploring different ecosystems for DeFi, NFTs, and payments. This trend raises concerns about Bitcoin’s long-term utility beyond being merely a value store.
With BTC hovering around a critical level, the next few weeks will reveal whether Bitcoin can stabilize and recover or if the downtrend will persist, testing even lower support zones.
Bitcoin Struggles Below Key Moving Averages as Bears Gain Strength
Currently, Bitcoin is trading at $82,500 and has struggled to reclaim the 200-day moving average, which is a key technical indicator frequently used to identify long-term trend directions. With Bitcoin failing to advance, bearish momentum is mounting, complicating efforts for bulls to regain control. The longer BTC remains beneath this critical level, the stronger the bears become, heightening the risk of additional downward movement.
For any recovery to take place, BTC must maintain its current demand zones and breaking above $86,000, coinciding with the 200-day EMA. A decisive break and hold above this area would signal a resurgence of bull activity and could potentially pave the way for a wider market recovery. Without a significant advance above this resistance, BTC may remain trapped in its downtrend, complicating any efforts to regain higher price levels.
Should Bitcoin drop below the critical $80,000 threshold, it would represent a significant decline, likely prompting another wave of selling pressure. This outcome could hasten BTC’s fall, potentially directing it toward lower demand zones and prolonging the existing bearish trajectory. The forthcoming trading sessions are crucial for evaluating Bitcoin’s next major move.
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