Bitcoin (BTC) is in recovery mode after a brief dip to sub-$30,000. A move through the day's pivot and the 50-day EMA would shift investor sentiment.
On Monday, bitcoin (BTC) fell for a fifth consecutive day, with risk aversion from the global financial markets causing crypto investors to jump ship.
Following a 4.05% decline on Sunday, bitcoin tumbled by 11.63% to end the day at $30,077.
A day-long sell-off saw bitcoin fall to a final hour intraday low of $30,068 to test support at $30,000 before ending the day at $30,077.
The reversal saw bitcoin slide through January’s previous current year low of $32,991 with ease.
This morning, the Fear & Greed Index fell deeper into the “Extreme Fear” zone. The Index fell from 11/100 to 10/100, suggesting a possible bottom at $30,000. This is the lowest level since January 8, when the Index also sat at 10/100.
The modest decline came despite bitcoin’s 11.63% loss.
The “Extreme Fear” zone, however, reflects investor expectations of further price deterioration, which is aligned with the technical indicators.
In late March, the Index hit a current year high of 60/100, recovering from a January-8 current year low of 10/100.
With the Index sitting at a current year low, downside risk remains. Bitcoin now needs to hold above a June 22, 2021 low of $28,908 to avoid the risk of a fall back to sub-$25,000 levels.
On Monday, the NASDAQ 100 tumbled by 4.29% to end the day at 11,623.25. The last time the NASDAQ was at current levels (Nov-2020), bitcoin was at sub-$20,000.
At the time of writing, the NASDAQ 100 Mini was down by a modest 15.75 points ahead of tomorrow’s US inflation figures.
This morning’s movements across the crypto market suggest a bottom for riskier assets. A dead cat bounce could be in play, however, with no market event unfolding to support a rebound.
At the time of writing, BTC was up by 3.68% to $31,185. A bearish start to the day saw bitcoin fall to a morning low of $29,836 before finding support.
Through the early morning, a hold above a July 20, 2021 low of $29,320 was key.
BTC will need to move through the day’s $31,461 pivot to target the First Major Resistance Level at $32,844. BTC would need broader market support to break out from $31,500.
In the event of an extended rally, BTC could test the Second Major Resistance Level at $35,623. The Third Major Resistance Level sits at $39,782.
Failure to move through the pivot would bring the First Major Support Level at $28,683 into play. Barring another extended sell-off, BTC should avoid the Second Major Support Level at $27,300.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. BTC sits below the 50-day EMA, currently at $35,731. This morning, we saw the 50-day EMA pull back from the 100-day EMA, delivering downside pressure. The 100-day EMA also fell back from the 200-day EMA, BTC negative.
A move through the 50-day EMA would support a look at $37,000.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.