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


It has been a tough week for the cryptocurrency market, primarily due to the Terra ecosystem collapse and its knock-on impact on Bitcoin (BTC), Ethereum (ETH) and altcoin costs, plus the panic promoting that befell after stablecoins misplaced their peg to the U.S. greenback.

The bearish headwinds for the crypto market have been constructing since late 2021 because the U.S. greenback gained power and america Federal Reserve hinted that it could elevate rates of interest all year long.

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Based on a latest report from Delphi Digital, the 14-month RSI for the DXY has now “crossed above 70 for the primary time since its late 2014 to 2016 run up.”

DXY index efficiency. Supply: Delphi Digital

That is notable as a result of 11 out of the 14 cases the place this beforehand occurred “led to a stronger greenback ~78% of the time over the next 12 months,” which factors to the chance that the ache for property might worsen.

On common, the DXY gained roughly 5.7% after its RSI rose above 70, which from Might 13’s studying “would put the DXY Index simply shy of 111, its highest stage since 2002.”

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

Delphi Digital mentioned,

“Assuming the correlation between the DXY and BTC stays comparatively sturdy, this is able to not be welcoming information for the crypto market.”

Bitcoin is at a key space for worth bottoms

Taking a much bigger image strategy, BTC is now retesting its 200-week exponential transferring common (EMA) close to $26,990, which has “traditionally served as a key space for worth bottoms” in keeping with Delphi Digital.

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

Bitcoin can also be persevering with to carry above its long-term weekly assist vary of $28,000 to $30,000, which has confirmed to be a powerful space of assist all through the latest market turmoil.

Whereas many merchants have been panic promoting in latest days, Pantera Capital CEO Dan Morehead has taken a contrarian strategy, noting, “It’s greatest to purchase when [the] worth is properly beneath development. Now’s a type of instances.”

Bitcoin fund inflows relative to cost development. Supply: Twitter

Morehead mentioned,

“Bitcoin has been this “low cost” or cheaper relative to development solely 5% of time since Dec 2010. When you have the emotional and monetary sources, go the opposite method.”

A phrase of warning was provided by Delphi Digital, nonetheless, which famous that “the most effective alternatives or “offers” out there aren’t round for lengthy.”

Since BTC has been buying and selling within the $28,000 to $30,000 vary for an prolonged time period, “the longer we see worth construct in these areas, additional continuation turns into extra doubtless.”

If additional decline happens, the “weekly construction and quantity construction assist at $22,000 to $24,000” and the “2017 all-time excessive retests of $19,000 to $24,000” are the subsequent main areas of assist.

Delphi Digital mentioned,

“Early indicators of capitulation are beginning to bleed by means of, however we are able to’t say we’re nearing the purpose of max ache simply but.”

The views and opinions expressed listed here are solely these of the writer and don’t essentially replicate the views of Each funding and buying and selling transfer entails danger, you need to conduct your individual analysis when making a call.