Bitcoin sell-off could stabilize around 42k support

Sellers remained active on Wednesday as bitcoin (BTC) dropped below $50,000 after Tesla halted acceptance of payments for new vehicles in the currency.

The cryptocurrency was trading around $49,400 at press time and could find lower support around $42,000.

Long-term momentum continues to weaken during several months of consolidation. BTC remains under pressure after reaching the upper bound of a three-year price channel.

• The relative strength index (RSI) on the four-hour chart is oversold similar to April 25 which preceded a price recovery.

• However, the RSI is not yet oversold on the daily chart. This means bitcoin could trade lower towards $42,000 support.

• Bitcoin returned below the 100-day moving average which created resistance around $53,600.

• Over the short-term, higher volatility and frequent drawdowns could discourage buyers. For now, the long-term trend remains intact above $42,000.

Four-hour bitcoin chart shows support and resistance levels with RSI.

Source: TradingView