Bitcoin falls 5% after rallying above $42,000 to its highest price since May
- Bitcoin slipped more than 5% on Monday after surging above $42,000 over the weekend.
- After 10 consecutive days of gains, the coin was trading lower by 5.47% to $39,295 as of 9:06 a.m. ET.
- Technically, bitcoin has closed above the 21-week EMA on Monday, as well as the 100-day SMA, said Marcus Sotiriou of GlobalBlock.
Bitcoin slipped more than 5% on Monday after the world's largest cryptocurrency surged above $42,000 over the weekend.
After 10 consecutive days of gains, the coin was trading lower by 5.47% to $39,295 as of 9:06 a.m. ET. It hit $42,606 on Saturday, its highest level since mid-May.
"It seems we're seeing some profit-taking in bitcoin after the crypto broke $41,000 - a level it's struggled with since late May," said Craig Erlam, senior market analyst at Oanda, in a note Monday.
Still, some metrics suggest a continuation of the recent uptrend, said Marcus Sotiriou, sales trader at GlobalBlock.
Technically, bitcoin has closed above the 21-week exponential moving average on Monday, regarded by many as the key bull market support, as well as the 100-day simple moving average, Sotiriou said.
However, he added bitcoin may fall back to roughly $36,000 or lower before another embarking on another rally.
Investors are looking to a new law in Germany that allows institutional funds to invest as much as 20% of their assets in cryptocurrency, he said. Combined, total assets under management of these funds amounts to around $2 trillion, which translates to around $415 billion that could potentially come into the market. The law took effect Monday, August 2.
Bitcoin has been trading rangebound for the past months after inching near $65,000 in mid-April, its highest price ever. The coin then suffered a massive crash in May, kicked off by Tesla's reversal in accepting bitcoin as payment and China's bitcoin mining clampdown.
More recently, bitcoin has staged smaller rallies after bullish comments from its biggest proponents such as Elon Musk, Cathie Wood, and Jack Dorsey in July. Speculation of Amazon's foray into digital assets spurred by a curious job listing also helped push the its price upward.
Bitcoin is up 34% year-to-date.