Given the strength of Bitcoin (BTC) and other factors, investors are wondering if “buying the dip” is a good strategy. Is Bitcoin at the bottom or is there a ways to go? We have compiled the current analysis…
Analysts discuss whether the Bitcoin price has bottomed out
The collapse of the Terra ecosystem and its on-chain effect on Bitcoin (BTC), Ethereum (ETH) and altcoin prices, as quoted by Cryptokoin.com The panic selling after watching the instability of stablecoins caused a rough week for the cryptocurrency market. Downside headwinds for the crypto market have continued to be felt since late 2021, as the dollar strengthens and the Fed hints that it will raise interest rates throughout the year. According to a recent report from Delphi Digital, the 14-month RSI for DXY “crossed above 70 for the first time since late 2014 to 2016.”
This is noteworthy because 11 out of 14 cases where this has occurred previously “leaded to a 78% stronger dollar over the next 12 months”, which led to cryptocurrencies points to the possibility of worsening the pain. On average, DXY is up roughly 5.7% after the RSI broke above 70, which as of the 13th May reading “will push the DXY Index slightly below 111, its highest since 2002.”
Delphi Digital analysts say:
Assuming the correlation between DXY and BTC is relatively strong, this would not be good news for the crypto market.
BTC trades in critical area for setting bottoms
In a bigger picture approach, BTC is now 26,990 which “historically served as a key area for price dips” according to Delphi Digital. It is retesting the 200-week EMA around the dollar.
Bitcoin also remains above the long-term weekly support range of $28,000 to $30,000, which has proven to be a strong support area throughout the recent market turmoil. While many investors have been panic selling lately, Pantera Capital CEO Dan Morehead says he takes the opposite approach:
It’s best to buy when the price is well below the trend. Now is one of those times…Bitcoin has been this “cheap” or cheaper compared to only a 5% trend since December 2010. If you have the emotional and financial resources, go the other way.
However, Delphi Digital states that “the best deals or “deals” in the market won’t last long. Since BTC has been trading in the $28,000 to $30,000 range for a long time, “the longer we see a price increase in these areas, the more likely it is to continue”. If there are further declines, “weekly structure and volume structure support between $22,000 and $24,000” and “2017 ATH tests between $19,000 and $24,000” are the next major support areas. According to Delphi Digital:
Early signs of surrender are starting to bleed, but we can’t say we’re approaching the maximum pain point yet.
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