Bitcoin Under Pressure as Bears Regain Control
Günay Caymaz | Mar 03, 2023 10:09AM ET
- Bitcoin is trading around $23,000, but selling volume below $23,200 caused a drop to $22,000.
- Silvergate's financial problems negatively impacted leading crypto companies, contributing to BTC's downward momentum.
- BTC could rally in weekend trading if it holds above the $22,200 support level.
Bitcoin (BTC) has been trading in a narrow range since the beginning of the week, attempting to hold the $23,000 level. However, volume selling below $23,200 throughout the week saw BTC fall to $22,000.
The recent downward momentum in crypto markets began when the financial problems of U.S. crypto-focused company Silvergate Capital Corp (NYSE:SI) came to the fore. Leading crypto companies in the U.S. decided to stop doing business with the bank, citing Silvergate's problems. This development had a negative impact on the already stalled bitcoin price, causing a remarkable drop of 6% in one hour.
Looking at the latest situation, Bitcoin's downward momentum continued to the 2nd support zone, which we calculated at the beginning of the week based on the previous week's price movement.
After Bitcoin fell as low as $22,000, it was seen that selling stopped at this point. BTC is expected to remain above the $22,200 support level ahead of U.S. trading hours.
If BTC can hold above this support price, a rally may be possible in weekend trading. While the market is currently in a wait-and-see mode, a daily close above the $22,700 level may be the first step toward a recovery. A move into the $23,200 - $23,700 range could then have the effect of reversing bitcoin's short-term negative outlook.
Meanwhile, the Stochastic (RSI) on the daily chart is floating in the oversold territory. If the Stoch RSI rises above 20 in a potential buy trade, it could be an important signal for BTC's recovery.
However, BTC remains technically negative at the moment. Hourly closing below the $22,200 average will increase the likelihood of bearish movement. As such, we can see that BTC could fall as low as $21,600, the February support level.
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In the short term, the $21,250 average remains the main support for BTC. While the 3-month exponential moving average protects this price zone, it is also the 3rd support price on a weekly basis.
Considering that bitcoin's January rally accelerated with a price above the 3-month EMA, this moving average at $21,300 today could be a critical indicator for BTC's new direction.
In summary, as long as Bitcoin holds the $21,200 - $21,300 range, it will continue its recovery process. Daily closes below this level could see a new bearish momentum begin below $20,000.
Disclosure: The author doesn't own any of the securities mentioned.
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