Key Points
- Bitcoin’s price has seen a modest recovery from monthly lows, but has struggled to surpass the $85,000 resistance.
- There are potential risks and opportunities for Bitcoin’s recovery, including investor sentiment and technical patterns.
Bitcoin’s price has experienced a slight recovery from its lowest point this month, but it faces challenges in breaking the $85,000 resistance level.
On Saturday, the price of Bitcoin (BTC) increased to $84,525, a 10% rise from its lowest point this month. However, it remains in a local bear market, having fallen by over 22% from its peak this year.
Market Activity
At the time of writing, Bitcoin was trading just above $84,335. Alongside Bitcoin, other altcoins also saw a slight increase in their prices on Friday, reflecting the performance of other assets such as stocks and gold. The Dow Jones index rose by over 650 points, while the S&P 500 and Nasdaq 100 jumped by 117 and 450 points, respectively. Gold reached a record high of $3,010.
Challenges to Bitcoin’s Recovery
Bitcoin’s recovery is facing two potential risks. Firstly, there are indications that investors are still fearful. Although the fear and greed index has moved out of the extreme fear zone of 18, it remains in the fear zone of 22. This fear is reflected in the fact that spot Bitcoin ETFs lost $143 million in assets, leading to weekly outflows of $870 million.
Secondly, from a technical perspective, Bitcoin has formed a death cross, with the 50-day and 200-day Weighted Moving Averages crossing each other. This pattern often indicates further downside over time. In Bitcoin’s case, there is potential to retest $73,900, the highest level in March 2024.
Potential Opportunities for Bitcoin
There are also two potential opportunities for Bitcoin’s recovery. The first opportunity lies in the upcoming report from the Federal Reserve after its second meeting of the year on March 18-19. If the central bank hints at more interest rate cuts due to recession fears, this could be positive for Bitcoin and other altcoins.
The second opportunity is the possibility of investors adopting a risk-on sentiment and buying the dip in the stock and crypto market. This has happened before, such as during the COVID-19 pandemic when investors sold stocks and crypto in March 2020 and then bought the dip as the Fed adopted a highly dovish sentiment.
