Bitcoin has recently dropped below the critical threshold of $70,000 for the first time in months, reaching its lowest level in three months. This downturn is attributed to various factors, including rising inflation concerns in the U.S., heightened expectations of an interest rate increase by the Federal Reserve, and volatility in technology stocks. Additionally, outflows from exchange-traded funds (ETFs) and liquidations in leveraged trading have intensified the selling pressure.
Bitcoin Tests Key Support Level
Currently trading around $67,500, Bitcoin is testing its 200-week simple moving average, which stands at approximately $67,993. This marks the first time since August that Bitcoin has approached this significant long-term trend line. Keith Alan, co-founder of Material Indicators, emphasizes the importance of this level, as it has historically acted as both a support and resistance point during bear markets.
Alan points out that the weekly Relative Strength Index (RSI) has dropped to around 41.5, a level previously seen as support in late July. He warns that if Bitcoin’s RSI falls below this mark, it could lead to another test of the bottom at $57,700. Maintaining stability around the current support could provide the necessary foundation for a potential recovery in Bitcoin’s price.
A Buying Opportunity on the Horizon?
In light of Bitcoin’s recent movements, some analysts view the situation as offering a potential buying opportunity. Matt Cole, CEO of Strive, notes that this juncture represents a favorable moment for long-term investors, emphasizing the historical significance of the 200-week moving average.
Cole also highlighted Strive’s strong performance during the recent declines, explaining that the company raised funds through preferred stock issuance without leveraging BTC assets for collateral, thereby sidestepping risks associated with margin calls.
Could Bitcoin Still Reach $100,000?
Despite the current challenges, some crypto analysts remain optimistic about bitcoin’s future trajectory. Analyst Crypto Capo has commented that a local bottom may have formed and suggests that Bitcoin could rebound to the range between $100,000 and $108,400 after finding support between $64,900 and $73,800. This scenario is contingent upon Bitcoin holding its ground during this crucial testing period.
Note: This article does not constitute investment advice.
