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Monday, March 20, 2023

Bitcoin: on the emergency grounds

Bitcoin: on the emergency grounds

Bitcoin / U.S. dollar BITSTAMP:BTCUSD

The moment that all crypto enthusiasts were waiting for more than one whole year is for the crypto market to reverse its trend and start its old road to the upside. However, what happened during the previous week is not so much a time for celebration, if we exclude those with significant profits on their accounts. Namely, a move which occurred during the previous week was not at all on a healthy grounds, but it could be more perceived as an emergency grounds. As quantitative tightening put many banks in the US and Credit Suisse in Switzerland, many holders of deposits within the banking sector decided to move their cash to more secure places than banks. And the solution was obvious – the crypto market. When the situation around banks settles down, there is a high probability that current price levels will return to the lower levels. However, this was certainly an excellent time to be long in BTC .

Although BTC started the previous week above level of $22K, the price was quite swiftly pushed to the higher grounds and to $25K resistance line. This price level was also quite easily breached, and the BTC finished the week at its highest level of $27.8K. The RSI clearly reached the overbought side of the market, which would, under normal circumstances, indicate a potential for a short term reversal. However, in a situation like this one, the short reversal will occur only when the market exhausts itself, or when new deposits stop coming to the crypto market. MA50 continues to diverge from its MA200 counterpart, supporting further the Golden cross that occurred a few weeks ago.

Situations like the one that occurred during the previous week are quite tricky from the perspective of technical analysis . The market is just not under “normal” conditions, so in case that deposit flow continues, then the price would certainly go to the higher grounds. However, in the opposite case, there is some probability for a $25K support line to be tested in a week ahead. Still, precaution in trading is highly recommended.

Via TradingView Ideas

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