Bitcoin price dips to $65K as BTC RSI reverts to pre-ETF take-off levels

Nguồn Fxstreet
02/04/2024 19:00
  • Bitcoin price has dropped by around $7,000 on Tuesday as markets shake off Easter holiday.
  • BTC RSI is at levels last seen when Bitcoin price was at $41,800.
  • The 200-day EMA remains critical in preventing an extended fall.

Bitcoin (BTC) price suffered a flash crash on Tuesday, liquidating millions in positions across the market. It came as traders came out of a long weekend, which was extended by the Easter holiday. The low trading volumes translated into heightened volatility, and BTC longs are suffering for it.

Also Read: Bitcoin whales position themselves for pre-halving pump

 

Bitcoin, altcoins, stablecoins FAQs

Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.

Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.

Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.

Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.

Bitcoin RSI reverts to pre-ETF take-off levels

Bitcoin price crashed from $71,366 to $64,588 in less than 48 hours. The nearly $7,000 crash liquidated nearly $700 million in positions across the market between Monday and the early hours of the US session on Tuesday.

The dump comes after the upward momentum for BTC disappeared, and sellers took over the market. According to some analysts, the drop is a typical shake off, intended to wipe out the weak hands.

It has not escaped the eyes of analysts that the BTC Relative Strength Index (RSI) has dropped below 50, resetting to levels last seen during the last week of January when Bitcoin price was around $41,800. Specifically, this was just before the exchange-traded fund (ETFs) inflows started to explode.

Nevertheless, reports indicate that weekly ETF flows are positive again after seesawing between a slowdown and more outflows compared with inflows. This should keep hope alive for BTC bulls.

Elsewhere, Tether, the cryptocurrency stablecoin (USDT) pegged to the US Dollar, has moved 60 million USDT from its treasury to Kraken Exchange. The network has also donated $100,000 to BTCPay Server, so it can continue working on enabling anyone to accept BTC. This encourages adoption for the digital asset.

This is also reinforced by speculation that BTC ETFs will be added to UBS platform, which manages $3.5 trillion in global wealth and boasts around $98 billion in market capitalization. Notably, UBS integrating Bitcoin ETFs marks a significant shift in traditional finance's embrace of crypto.

It is a bullish move that erodes barriers for high-net-worth individuals to dive into digital assets. The adoption curve steepens as big players capitulate to crypto's allure. In the latest, the US government has sent a possible test transaction of around 30,174 BTC worth $2.1 billion to Coinbase. The BTC is reportedly from the Silk Road hack funds.

Bloomberg’s James Seyffart, an ETF analyst, has commented, “Government was simply waiting for Judge Failla to dismiss the SEC's accusations that Coinbase conducted brokerage activity through Coinbase Wallet before making this move.”

Bitcoin price outlook as BTC RSI dips below 50

Despite a prevailing bullish thesis on the big picture, the market is currently leaning in favor of the downside after the BTC RSI slipped below the 50 mean level. The Awesome Oscillator (AO) indicator is also accentuating what is seen with the RSI, pointing to falling momentum.

If Bitcoin price breaks support offered by the 200-day Exponential Moving Average (EMA) at $65,556, which has been critical since October, the fall could extend to the $60,800 level.

Notice the hidden bearish divergence on the BTC chart, seen with the RSI recording lower lows whilst the Bitcoin price records higher lows. This increases the chances for further downside if a full reversal emerges.

BTC/USDT 1-day chart

If the 200-day EMA holds as support, it would guarantee a rebound in Bitcoin price toward the upside. A flip of the $69,000 threshold into support would signal more buy orders, increasing the odds for further upside. The first target in such a directional bias would be to reclaim the $73,777 peak before a chance to record a new peak above the $74,000 range.

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