Bitcoin has experienced a notable retreat over the past three weeks, hitting a low of $60,000 last Friday. However, it has since made a significant recovery, surpassing the crucial resistance level of $70,000 as investors took advantage of the dip. This shift in price coincided with a movement in the Crypto Fear and Greed Index, which has entered the extreme fear zone, indicating a potential turning point for market sentiment.
The recent price action has revealed a bullish chart pattern, suggesting a sustained rally is on the horizon. A key observation from the weekly chart is the formation of a hammer candle. This pattern features a long lower shadow and a small body, and it aligns with the 61.8% Fibonacci Retracement level, a common area for price rebounds. The Relative Strength Index (RSI), which has reached an oversold level of 30, adds to the bullish sentiment. The last occurrence of such RSI levels was in July 2022 when Bitcoin was trading at $17,000, leading to a significant upward movement.
Given these technical indicators, there is a strong possibility that Bitcoin will continue to climb, with bulls eyeing the next resistance level at $80,000. Surpassing this threshold could pave the way for further gains, potentially propelling the price toward the significant milestone of $100,000.
Nevertheless, caution is warranted. As previously discussed, the current upswing may be indicative of a dead-cat bounce (DCB), a phenomenon where an asset briefly rebounds during a downtrend before resuming its decline. Historical data shows that Bitcoin rallies typically commence when the Fear and Greed Index is in extreme fear, and the recent plunge to a multi-year low of 5 aligns with this pattern. Investors often recall the advice attributed to Warren Buffett, which suggests buying when there is fear and selling during periods of greed.
Moreover, while there has been a spike in outflows from spot Bitcoin ETFs, demand appears stable. This is evidenced by the declining supply of Bitcoin on exchanges over recent months. Looking back at the cryptocurrency”s trajectory, Bitcoin has surged from almost zero in 2009 to over $70,000 today, with an all-time high of $126,200. Throughout its history, Bitcoin has endured significant corrections, prompting fears of permanent decline, but it has consistently rebounded from such downturns, as seen during the FTX and Terra incidents in 2022 and the early pandemic market reactions.
In conclusion, while current indicators suggest a possible recovery for Bitcoin, investors should remain vigilant and consider the broader market context as they navigate the evolving landscape.
