Bitcoin Drops 3.6% From Weekly Highs – What Are the Key BTC Price Levels to Watch?

Bitcoin (Bitcoin) threatened a sharp retracement overnight through March 23, when the weekly highs saw their first test.

BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView

BTC misses “very bullish” daily close

Data from Cointelegraph Markets Pro and trading view showed that BTC/USD fell from a high of $43,337 to a low of $41,779 on Bitstamp before recovering.

At the time of writing, the pair was trading around $42,300 – still $1,000 off the highs.

The buzz was evident Tuesday thanks to increased publicity focused on the blockchain protocol Terra $3 billion BTC buy-in.

According to co-founder Do Kwon, the bulk of the funds intended to be used to support Terra’s new stablecoin, TerraUSD (UST), had not yet been purchased, leaving room for further potential BTC price swings.

Nonetheless, sentiment in the markets cooled overnight, with Bitcoin missing a “very bullish” daily close around $200.

However, analyst Matthew Hyland expressed confidence that the tide is turning for Bitcoin, which indicated, among other things, one ongoing escape attempt for Bitcoin’s daily Relative Strength Index (RSI).

His downtrend, he noted, had stopped before hitting the all-time high in November.

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

Trader Credible Crypto, meanwhile, highlighted a similar level of $42,500 as important to flip.

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

“That means the upside should hold and we want to see some consolidation above this level to continue. Let’s see what we come up with in the next day or two.”

European Central Bank sees new balance sheet record

On a macro level, news that Thailand made its choice Ban crypto for payments sent negative sentiment out of Asia, while in Europe, the European Central Bank’s (ECB) balance sheet rose to record highs.

Related: $43,000 BTC Flip Support? According to derived metrics, not anytime soon

Now, at more than 8.7 trillion euros ($9.59 trillion), market commentator Holger Zschaepitz began to question whether “the sky’s the limit” on ECB bond purchases.

“The sky’s the limit? The ECB balance sheet has reached new ATH of >8.7 trillion euros. Total assets increased by another 13 billion euros as the ECB continues to buy bonds despite the record high,” he said summarized Wednesday alongside a chart from Bloomberg Terminal.

“Eurozone inflation. Balance sheet now equals 82% of Eurozone GDP versus 37% for the Fed and 136% for the BoJ.”

ECB balance sheet chart. Source: Holger Zschaepitz/ Twitter

As Cointelegraph reportedThe US Federal Reserve plans to end its asset purchases and start reducing its balance sheet.