Buy the dip, or wait for max pain? Analysts debate whether Bitcoin price has bottomed

1 week ago 15

It has been a unsmooth week for the cryptocurrency market, chiefly due to the fact that of the Terra ecosystem collapse and its knock-on effect connected Bitcoin (BTC), Ethereum (ETH) and altcoin prices, positive the panic selling that took spot aft stablecoins mislaid their peg to the U.S. dollar.

The bearish headwinds for the crypto marketplace person been gathering since precocious 2021 arsenic the U.S. dollar gained spot and the United States Federal Reserve hinted that it would rise involvement rates passim the year.

According to a caller study from Delphi Digital, the 14-month RSI for the DXY has present “crossed supra 70 for the archetypal clip since its precocious 2014 to 2016 tally up.”

DXY scale performance. Source: Delphi Digital

This is notable due to the fact that 11 retired of the 14 instances wherever this antecedently occurred “led to a stronger dollar ~78% of the clip implicit the pursuing 12 months,” which points to the anticipation that the symptom for assets could get worse.

On average, the DXY gained astir 5.7% aft its RSI roseate supra 70, which from May 13’s speechmaking “would enactment the DXY Index conscionable shy of 111, its highest level since 2002.”

BTC/USD vs. DXY Index (inverted) and a rolling 60-day correlation. Source: Delphi Digital

Delphi Digital said,

“Assuming the correlation betwixt the DXY and BTC remains comparatively strong, this would not beryllium welcoming quality for the crypto market.”

Bitcoin is astatine a cardinal country for terms bottoms

Taking a bigger representation approach, BTC is present retesting its 200-week exponential moving mean (EMA) adjacent $26,990, which has “historically served arsenic a cardinal country for terms bottoms” according to Delphi Digital.

BTC/USD vs. 200-week EMA vs. 14-week RSI. Source: Delphi Digital

Bitcoin is besides continuing to clasp supra its semipermanent play enactment scope of $28,000 to $30,000, which has proven to beryllium a beardown country of enactment passim the caller marketplace turmoil.

While galore traders person been panic selling successful caller days, Pantera Capital CEO Dan Morehead has taken a contrarian approach, noting, “It’s champion to bargain erstwhile [the] terms is good beneath trend. Now is 1 of those times.”

Bitcoin money inflows comparative to terms trend. Source: Twitter

Morehead said,

“Bitcoin has been this “cheap” oregon cheaper comparative to inclination lone 5% of clip since Dec 2010. If you person the affectional and fiscal resources, spell the different way.”

A connection of caution was offered by Delphi Digital, however, which noted that “the champion opportunities oregon "deals" successful the marketplace are not astir for long.”

Since BTC has been trading successful the $28,000 to $30,000 scope for an extended play of time, “the longer we spot terms physique successful these areas, further continuation becomes much likely."

If further diminution occurs, the “weekly operation and measurement operation enactment astatine $22,000 to $24,000” and the “2017 all-time precocious retests of $19,000 to $24,000” are the adjacent large areas of support.

Delphi Digital said,

“Early signs of capitulation are starting to bleed through, but we can’t accidental we’re nearing the constituent of max symptom conscionable yet.”

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.

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