Bitcoin, the leading cryptocurrency, fell to nearly $38,000 following Fed announcements and Central Bank of Russia warnings. However, sellers may be running out of momentum.
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RSI shows Bitcoin near bottom
According to experts at Bloomberg Business, Bitcoin’s relative strength index (RSI) has entered the “magic” 30-40 zone.
Bitcoin RSI | The source: Bloomberg Business
Historically, when the RSI is below 40, Bitcoin becomes very oversold, meaning bears have no energy left to hold the price down. RSI is an indicator created by stock and commodity analyst J. Welles Wilder in 1978.
The RSI for major cryptocurrencies has been in the “oversold” zone since early January.
On January 7, 2022, the RSI hit a two-year low for ETH. That is why some analysts are certain that BTC and major altcoins are nearing the bottom of the current mini bear market.
In the latest market update on Friday, analyst Filbfilb of trading platform Decentrader raised concerns that $290 million worth of liquidations on the day would not be enough to stave off a fresh drop.
Next stop is $33,000
After reversing course back to $38,250, BTC’s status isn’t looking good at press time, hitting new lows before Wall Street opens.
Cross-crypto liquidations crossed the $720 million mark on the day, but for Filbfilb this is a historically meager level, and with liquidity likely to be concentrated below $38,000, the likelihood of a crash trigger is high. very high.
“Liquidation since the price pushed below $40,000 has so far been low, barely noticeable on the chart overall. At the same time, the funding rate remains relatively flat, which means that bears are winning over margin traders. They almost all lose. We’ve been talking about liquidity that could be under $38,000 for a while now.”
If spot prices start to ease leveraged positions there, the next stop to “relief” lies at $33,000.
“If we lose the $38,000 level with some upside momentum, we are expecting a liquidation event similar to that on December 4, 2021 and first towards $33,000, then possibly the line.” 100-week moving average ($31,500), but $33,000 is also a potential level for some relief.”
Such an outcome would make Bitcoin trade like it did in July. At that point, the price established a floor just below $30,000 (closer to its 2021 open price) before recovering.
BTC/USD chart and blue liquidity zone | Source: Decenttrader
Bitcoin needs to close the day above $40,000
Meanwhile, to secure further momentum, things will need to change dramatically.
The rising price must be accompanied by a negative funding rate, indicating that the short has lost confidence in a rally, and that the long-to-short ratio will also gradually decline. Once the BTC price closes the day above $40,000 that would trigger such a scenario.
At the time of writing, BTC hovers around $38,693 as volatility once again picks up, according to data from TradingView.
BTC/USD 1 Hour Chart | Source: TradingView
You can see the Bitcoin price here.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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