Threats of rising inflation and a potential Russian incursion of Ukraine have dampened the global market outlook. Unfortunately, Bitcoin was at the receiving end of a brutal sell-off, logging a near 20% drop in value over the past week. The charts picture a dire condition, with some analysts calling for a return to $30K. However, there was some evidence to suggest that BTC can avoid the worst-case outcome. At the time of writing, BTC traded at $36,907, down by 6% over the last 24 hours.
Bitcoin Daily Chart
Unable to advance above $46K last week, Bitcoin’s relief rally came to a displeasing end as bears saw a return to normality. Bitcoin was about to form a sixth red candle in the last seven days of trade, outlining the massive surge in downwards pressure. Near-term defenses were available at $36,250 and the same might be able to delay a severe reaction. A dead cat-bounce back to $39,600 cannot be ruled out as well, with the daily RSI just shy of the oversold region and a potential double bottom awaiting at $33K. However, the resulting head and shoulders pattern would only play in favor of the bearish side.
A few regions on the chart stood out as more reliable. For instance, BTC’s demand zone between $30,000-$28,660, established in June-July 2021, was ideal for a price reset. BTC’s late 2021 bull run came after a base was established within this zone.
Bitcoin losing out to gold
Some cryptocurrency analysts also favor an extended decline. While comparing Bitcoin to gold, John Roque of 22V Research said in a research note “We’re looking for Bitcoin to get back to 30,000 and then break below there and we continue to expect gold will make a new all-time high“.
The king coin is often compared to gold as both are considered as a hedge against inflation. However, gold prices are soaring as global tensions remain high. Prices of the yellow metal are currently trading at just under $1900 an ounce, their highest level since June 2021.
Investors Not Buying The Dip, but that’s perhaps good
Large sell-offs can present opportunities to ‘buy the dip’, but data from Santiment revealed that investors have been jittery despite BTC’s discounted nature. As per Santiment, social volume mentions of ‘buy the dip’ have reduced drastically. However, the charts depict that BTC actually forms a ‘real bottom’ whenever social media mentions of the ‘buy the dip’ have been low. Bull runs were identified in July and October, both of which were preceded by low social volumes. Ironically, higher social volumes correlated to a downtrend resumption.
Conclusion
While chances of a return to $30K were considerably high, there was reason to expect that Bitcoin could hold ground above $33K. The daily RSI was nearing oversold territory while Santiment suggested that a true bottom could already be underway.