It’s a tough day to be a Bitcoin hodler today, judging by the bearish market performance. The cryptocurrency tanked more than 34% in the last 24 hours.

The cryptocurrency’s current performance is due to panic selling caused by China’s recent ban preventing Chinese businesses and companies, including banks, from engaging in any cryptocurrency-related activities. This includes transactions, crypto holding, or even facilitating the exchange of any form of decentralized digital currencies.

Crypto traders are concerned because the current bearish market pushed the price of Bitcoin below the $40,000 level, which was a critical support level. The last time that the price was lower than this crucial price level was in February this year. Bitcoin’s decline is still ongoing, and it is currently trading at $37,802.

Bitcoin’s technical performance confirms strong bearish momentum due to massive sell-offs related to China’s new crackdown on cryptocurrencies. The price is already trading below the 7-day, 25-day, and 99-day moving averages, and the latest volume figures also align with the heavy selling. The stochastic RSI is still not in the oversold region, suggesting that we might see some more selling.

Will Bitcoin’s price recover any time soon?

Bitcoin’s price has a cyclic performance where a market correction usually follows a strong buy or a strong sell. In that case, there is a chance that the price will attempt some recovery, considering that it is already down by a substantial margin. On the other hand, continued selling might continue in case of more negative news.

Bitcoin is currently approaching the $30,000 price level, which previously created a support level between January 22 and January 28. The cryptocurrency’s price will likely test support and experience a bounce-back around that level, which will probably be a good entry point to ride the market correction. However, a pullback at that price level will depend on the overall sentiment and the prevailing market news. Investors should be cautious about upcoming announcements that may lead to more downward pressure, forcing the price to break through the $30,000 support level.

Is the current bear market a repeat of the 2017 crash?

The last crypto crash took place in March 2018 on a fateful Thursday, during which the price of Bitcoin tanked by 51.4% in 24 hours. So far, the price is down less than 20% in the last 24 hours, but once again, the unpredictability of the market means it is still a toss-up. It really depends on whether the subsequent major crypto market news will be favorable or unfavorable.

Although it is necessary to exercise caution as a trader, now is also an excellent time to look for signs of the price bottoming out. Buying at the ideal point during the dip presents a chance for some gains during the correction phase. A major crypto market crash in 2021 will probably not be as severe or as deep as the crash in 2018 thanks to institutional backing and more market participation. The rising level of inflation in the U.S market has been encouraging more investors to shift their money into cryptocurrencies, and this is expected to create a softer landing for Bitcoin’s price in case of a bearish downturn.

A proper recovery will likely push Bitcoin back above $42,000 in the near-term. A large sell-off like what we witnessed in the last 24 hours means the price is susceptible right now. One of the potential indicators of recovery would be large buying of Bitcoin by whales and institutions, which would indicate confidence and fuel more buying.