By Samuel Indyk

Investing.com – was trading below $47,000 on Wednesday as cryptocurrencies look set to end the year with a whimper. While the market capitalization of the largest cryptocurrency in the world is down around 30% from its peak at November, this number has increased by around 66% year-to-date. It is currently down 17.5% and heading towards its worst month in nearly a year since May, when it dropped over 35%. 

The price movement of other major cryptos was similar, falling by around 4% within the last 24 hour, and trading at $3,750. Decentralised finance (DeFi), which is also linked, was also experiencing a decline with other cryptocurrencies falling by around 10% to 9% over the past 24 hours.

The decline of cryptocurrencies was caused by many factors, however the central bank stimulus has been removed. This will likely lead to cryptocurrencies falling further.

The Bank of England has accelerated its pace in tapering off asset purchases. Meanwhile, the ECB recently announced its end to its pandemic-related emergency purchasing programme. Markets were surprised earlier this month by the Bank of England’s vote to raise interest rates for the first-time since August 2018.

Investors could shun digital assets in favor of more stable, safer assets due to their highly speculated nature.

Technical Levels

Bitcoin’s recent drop has seen it fall below its 21-day moving mean of $48,500, and below the 200 day moving average at $47,750.

Also, the 50-day Moving Average has crossed below its 100-day counterpart. When a shorter-term moving average crosses below a longer term moving average it is known as a ‘death cross’ and is often a signal of a bearish trend. However, the more common moving averages used to signal a ‘death cross’ are the 50-day moving average and the 200-day moving average.

Support is found around $45,500, which was the low in December. Below this level, flash crashes from 4 occur.^ThSupport could be provided by December at $42,600

Positively, the 200 and 21-day moving Averages (mentioned previously) may now be acting as resistance.