The price of %Bitcoin ($BTC) has fallen below a critical support level amid ongoing market volatility.
The largest %Cryptocurrency by market value fell to $38,577 U.S. during Asian trading hours on April 18, a level last seen on March 15, according to market data.
Traditionally, $40,000 U.S. has been an important support level for Bitcoin as significant buying activity has happened around that level in the past.
The latest decline means that Bitcoin has lost over 17% since trading above $48,000 U.S. at the end of March this year.
The weakness appears to be due to tax-related selling. For U.S. investors, the deadline to submit 2021 tax returns is April 18. Last year, cryptocurrency holders sold digital assets during the tax season.
%Blockchain data shows that the selling pressure is likely coming from short-term traders with significant holdings of Bitcoin. However, derivative traders seem to be positioning for an extended decline in Bitcoin as evidenced by the number of “put” calls seen in the marketplace.
Put calls are used to bet that an asset’s price will decline over a certain period.