After last week’s FOMC meeting, Bitcoin responded by dumping to levels not seen since 2020. Over the weekend Bitcoin found a local bottom at the $17.7k mark before rebounding back above the $20k mark at the weekly close. At time of writing, BTC is currently trading at $20.5k, which is under the weekly 200 SMA of $22.5k (historically very strong support). So, what is BTC’s next move? Let’s take a look at the charts and find out!
Bitcoin Price Analysis
BTC is approaching the 4H 50 SMA (light blue line) after finding what appears to be a local bottom over the weekend. The 4H 50 SMA will be an important test for BTC and will determine if an uptrend can gain any momentum. This key level is currently at $21.5k.
The RSI on the 4H time frame is neutral, but the Stochastic is getting to the top of its range. We could see a short-term pullback to support in order for the Stochastic momentum indicator to reset.
BTC is heavily oversold on the daily, trading well below its moving averages. The nearest MA is the daily 50SMA, currently valued at $29.3k. If BTC begins an uptrend, it’s possible we could see a quick move up to close this gap. The $29.3k zone will act as resistance.
On the daily, BTC is looking heavily oversold. We could also see a bullish divergence beginning to form, with the Stochastic beginning to move up. It also makes it unlikely that a large dump will occur in the short term without either an upward move or long period of sideways consolidation.
Similar to the daily chart, the weekly also looks heavily oversold. The Stochastic is also at the bottom of its range, setting the stage for a large relief-rally once fear begins to subside.
The Weekly 200SMA has acted as a bear-market bottom for the last three cycles. While euphoric bears would like you to believe that this cycle is different, the burden of proof is on them. For now, it appears BTC has made a bottom just below the weekly 200 SMA, and could easily move above it this week. Similar to the March 2020 market crash, the price traded below the weekly 200 SMA only for a brief time before making a strong move back above. This key level to watch is currently at $22.4k.
Bitcoin Investor Sentiment
Bears have been absolutely euphoric this past week as BTC dipped to levels not seen for almost two years. With BTC bears like Peter Schiff doom-posting about the death of BTC and calling for $5k BTC, you know a local bottom has to be close. Likewise when BTC moon boys are calling for $1M BTC by the end of 2022, you know that market greed has peaked.
In this case, sentiment is overwhelmingly bearish – which means it’s a good time to begin dollar-cost averaging into a new long position.
Bitcoin Fundamental Analysis
Crypto firms and funds have been unwinding, adding fuel to the fire as the market tanks. Luna, Celcius, and now 3AC have all collapsed over the past month and increased the downward pressure on BTC’s price. However, a glimmer of hope is present as exchanges like Binance made large BTC purchases over the weekend when BTC hit the $17.7k mark. Reports have surfaced that Binance spent $2B buying up cheap BTC, helping the market to form a bottom. Additionally, there are rumors that Sam Bankman Fried and FTX are in talks to bail out 3AC and other distressed crypto firms.
Bitcoin’s hash rate has declined a bit as miners are no longer in profit at these price levels. Despite some rigs shutting off, Bitcoin’s hash rate remains over 200m TH/s – signaling a strong and secure network.
Conclusion
BTC has reclaimed its previous ATH of $20k, and has bounced from $18k levels to form new local support. While we may see a slowdown in the short term (as indicated on the 4H chart), the daily and weekly charts look absolutely primed for a relief rally. In all likelihood, this relief rally will take BTC past the weekly 200SMA – a bullish signal for traders and algos alike. With euphoric bearish sentiment, it seems to be a good time to begin DCA’ing into new long positions.
Support Zones:
- $18k
- 20k
Resistance Zones
- $22.4k
- 29.3k
Not investment advice. Do your own research.
