(Bloomberg) -- The crypto market could be facing a significant hurdle after its most recent rally.
Following a volatile push higher over the past few weeks, the Bloomberg Galaxy Crypto Index, which measures the performance of many of the most popular coins, is butting up against 600 -- a level that's acted as resistance dating back to mid-2019. For the index to see further increases this year, it may need to consistently trade above that level, technical analysis suggests.
In addition, the Moving Average Convergence Divergence (MACD) indicator has entered a negative divergence, indicating future gains could be hard to come by in the short term.
Still, the crypto index is in an uptrend and the sell signal could be seen as a consolidation phase. But should the negative trend gain traction, a revisit to the 500 level could be in play. That would imply a 10% retreat from current levels.
“Strong dollar gains are really weighing on all risky assets, and you're probably seeing a little bit of exhaustion after rallying up to that fresh 12-month high earlier in the week,” said Ed Moya, senior market analyst at Oanda Corp.
Bitcoin, the world's largest cryptocurrency, makes up 30% of the Bloomberg Galaxy Crypto Index. The coin breached $12,000 in recent days but has traded lower since, falling to as low as $11,635 on Friday.
To Simon Peters, an analyst at investment platform eToro, $14,000 could be Bitcoin's next upward resistance level.
“If prices continue to climb, it would really test investors' mettle,” Peters said. “I would expect to see exchange inflows increase as investors look to potentially crystallize their gains. This could push the price back toward $12,000.”
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