Bitcoin price hits 10-week low as $40,000 top becomes ‘evil bull trap’

Bitcoin (BTC) hit its lowest level in over two months on May 5 as Wall Street trading returned with a bang.

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

DXY Celebrates As Stocks, Crypto Tumble

Data from Cointelegraph Markets Pro and TradingView painted a worrying picture for Hodler as BTC/USD fell to $36,520 on Bitstamp.

Capping losses, which at one point totaled 8.3%, Bitcoin only rallied at a price last seen on February 24th of this year.

As Cointelegraph reported, the performance came alongside chaos in US markets as stocks gave up earlier gains to turn the economic outlook bearish. The Federal Reserve’s “priced in” rate hikes seemed to have been something of a red herring.

“BTC breaks below 37k yesterday after a nasty bull trap. A good lesson for many who persist in fighting the trend,” popular trader Cheds said reacted on that day.

At the time of writing, BTC/USD is trading around $37,000, having recouped a modest chunk of ground given up in the first two hours of Wall Street’s session. In comparison, the Nasdaq 100 lost 4.5% and the S&P 500 lost 3.2%.

Even news that blockchain protocol Terra had bought $1.5 billion worth of BTC to shore up its stablecoin TerraUSD (UST) failed to lift sentiment.

“Can you imagine how disastrous this will be for the credibility of the central bank (the trust in the fiat system) if this stock market eases further in the coming weeks and they do an aggressive policy reversal within a month or two have to. The trust is already in shambles…,” podcast host Preston Pysh commented when relative stability returned.

The action, meanwhile, was a boon for the US dollar, as the US Dollar Index (DXY) showed, which reversed earlier losses and retested its highest levels in twenty years.

DXY is close to 104 at the time of writing, up 1.2% on the day.

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US Dollar Index (DXY) 1 hour candlestick chart. Source: TradingView

The bulls have been feeling the most pressure since January

Amid the chaos, previous bullish theories on BTC that covered longer timeframes came under their own major test.

Related: ‘More Likely’ BTC Price To Hit $100K Before Bitcoin Hits $30K Lows, Forecast Says

Among them was that based on Bitcoin On Balance Volume (OBV).

OBV, a cumulative measure of volume used to identify buying and selling pressure, has actually called for upward movement in BTC price since January’s $32,000 lows, popular Twitter account IncomeSharks claimed on May 5.

A series of higher lows had since suggested that a serious downtrend might be averted based on OBV data.

However, as Cointelegraph reported, price targets of $30,000 or less in the coming months have only been raised in recent weeks.

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