Bitcoin: has bottomed, or maybe not?

The previous week was a heavy one for financial markets. There was a lot of news which impacted market sentiment, and a lot of price adjustments occurred on all financial markets. The crypto market was hit as well. The struggling of BTC to sustain levels above the 68K started on Monday, when the news hit the market that the US Government moved $2 billion worth of BTC to an unknown address named as Silk Road DOJ. The US Government did not comment on such a news, however, the crypto investors were concerned over its potential sale, in which sense, sort of closing of positions started. During the rest of the week BTC continued the struggle to hold above the $ 65K support line, after the FOMC meeting and Fed Chair Powells` note that the rate cut is “nearing”. Significantly lower than expected the US jobs data posted on Friday, pushed the coin further to the down side and the level of the 60K as of Saturday`s trading session. It should be also considered that such a strong push of the BTC price to the down side triggered a significant amount of margin calls for leveraged positions, which is an additional trigger for the price drop. In addition to all developments, the Bank of Japan increased interest rates by 25 basis points, pushing its local currency 8% higher against the US Dollar. Considering carry trade in foreign currencies, which investors are using, additionally profiting from interest rate differentials, extracted some additional funds from the crypto market.

Interestingly, despite such a strong push of the BTC price to the downside, the RSI is still not in the clear oversold market side. The indicator reached the level of 38 on Saturday, near to the oversold side. Moving averages of 50 and 200 days are slowly converging toward each other, but there is still some distance between them, in order to form a cross formation in the technical analysis.

Looking solely at technical indicators, the current question is whether BTC has bottomed or not at the level of 60K support line? On one hand, this represents a significant support line for BTC, which indicates that BTC will spend some time around this level to test it. Still, charts are pointing to some potential that the bottom of this cycle is between 58K and 55K. Still, the timing of these levels is unclear. For the week ahead, there is potential that the BTC will try to recover some losses from the previous week, but with relatively weak demand, the recovery might go to the level of 63K. Current charts are showing that the level of 50K might be a hard task at this moment.