2023-5-12 19:30 |
Bitcoin (BTC) investors have been closely monitoring the cryptocurrency market in recent days due to Bitcoin’s significant drop in price. The market’s largest cryptocurrency has shown a downtrend in its price action and has lost its key support level at $27,200, which was previously noted by the 50-day moving average (MA).
Despite the bearish trend, trader and analyst Ali suggests that there may be some hope for bulls. Though the market is currently in a state of decline, Ali believes that there is still a chance for BTC to experience a reversal shortly.
Buy The Bitcoin Dip?Ali points to the TD Sequential indicator on the Bitcoin 4-hour chart, which has shown a buy signal. In addition, a bullish divergence is developing on the Relative Strength Index (RSI), indicating a potential reversal shortly.
Bitcoin has been experiencing a period of volatility, with the cryptocurrency facing a strong resistance level at $28,000 in the past few days, following the release of the Consumer Price Index (CPI) rates by the Federal Reserve (Fed).
Although trader and analyst Ali believes that if Bitcoin can hold above the $26,000 support level, there could be an upswing to either $26,860 or $27,570. On the other hand, Ali suggests that if Bitcoin fails to hold above the $26,000 level, it could trigger a further drop to $25,200.
However, there is some good news for Bitcoin bulls, as the 200-day moving average (MA) is currently placed at $24,700. This level could potentially act as a crucial threshold for BTC, serving as a bottom line for the cryptocurrency in the short term.
Bitcoin And Crypto Market Vulnerable To Short Squeeze?According to the latest report by the Singapore-based digital asset trading firm, QCP Capital, this week’s sell-off has caused Bitcoin to fall through the head and shoulders trendline, but a close below $26,500 is still preventing a larger breakdown.
Additionally, Bitcoin has a negative divergence on momentum indicators, leading QCP Capital to be biased towards a near-term break lower, potentially to the $25,000 mark and then to the $20,000-$22,000 level.
Despite this, QCP Capital views the lower level of $20,000-$22,000 as a high-conviction medium-term buy zone. The firm has even sold physically settled puts at this level before, indicating its confidence in the cryptocurrency’s long-term prospects.
Related Reading: Key Support Levels To Monitor As Ethereum Price Slows Down
Furthermore, according to Chart 3 in the report, as seen below, an increase in volatility has historically led to a strengthening of the USD and a weakening of risk assets such as BTC.
The report notes that while the outcome of the current political drama in Washington is uncertain, the market’s response in terms of implied volatility across assets will be key in determining the next trend direction.
The report also suggests that a sharp increase in volatility could lead to a move lower for BTC and other risk assets. This could be a concern for investors who have seen BTC reach new annual highs in 2023. However, volatility can create opportunities for traders who can navigate the market’s ups and downs.
As of this writing, the largest cryptocurrency in the market, BTC, is currently trading at $26,300, down by 2.1% in the last 24 hours.
Featured image from iStock, a chart from TradingView.com
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