Bitcoin’s Bearish Spiral: Can BTC Hold Key Support Levels | Errante
Market Overview
Bitcoin plummeted to $78,000 on Friday, during the New York session, marking decline of around 24% from its all-time highs. The cryptocurrency leader saw a major sell-off, triggering mass liquidation. The Crypto Fear & Greed index showed the sentiment as fearful. Meanwhile, key economic developments and geopolitical uncertainties weight on the BTC, leaving traders in cautious mode. However, the markets recovered on Monday to $95,000 shedding off most of the losses as Trump reiterated the need for strategic BTC reserves.
Fundamental Analysis
Bitcoin’s recent downfall is attributed to Dubai based crypto exchange ByBit’s hack that triggered fear of suppression in the market. Meanwhile, regulatory uncertainties in the US loom as Cynthia Lummis endeavors for a major legislation that could influence the institutional involvement in the space.
From the macroeconomic view, the US economy experiences stagflation woes. According Bank of America’s recent survey, the growth could stay below the expected numbers while inflation may also persist, limiting Fed’s odds of rate cuts. Meanwhile, investors also fear of potential rate hikes as Fed chair faces strong political pressure. Trump’s recent push for a rate cut also adds another layer of uncertainty to the financial landscape.
The stock market volatility in the tech sector after Nvidia’s earnings has spilled over into the crypto arena as well. According to Standard Chartered analysts, the ETF flows remain a key risk as an outflow of $1 billion could drag the Bitcoin to the lows again.
However, the crypto leader found a strong bid when US President Trump announced that he directed the Presidential Working Group through an executive order to move forward on Crypto Strategic Reserves. He also reiterated to make America crypto capital of the world.
Technical Analysis
The BTC/USD’s daily chart shows a mixed scenario as the RSI value starts moving lower after hitting the 50.0 mark, indicating a mild weakness. Historically, prices wobble at these zone while the strength of the bounce is fair enough to hold gains. The 50-day SMA acts as a tough resistance for now. It seems like price is correcting recent gains and could break the hurdle once finds fresh buying. The $95,000 remains a resistance ahead of $98,000 and then $100,000. On the flip side, the $78,000 (swing low) acts as a tough support.
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