- Bitcoin rose modestly at the start of this week after crashing by close to 10 percent in the previous one.
- The top cryptocurrency found interim support near its 50-weekly moving average wave.
- Weak buying sentiment risks pushing it further lower, with an interim downside target sitting near $8,000.
Bitcoin closed a bloody week in anticipation of a recovery in the new one. But so far, its attempts have been inadequate.
The top cryptocurrency inched 1.49 percent higher to trade at $8,845 a token ahead of the London opening bell Monday. Its mild upside move came after a week full of massive sell-offs, started after a false rumor scared traders into panic-selling their bitcoin positions.
It started when an 11-year old bitcoin wallet moved about 40 BTC to an unknown address. Some thought it was Satoshi Nakamoto – Bitcoin’s pseudonymous creator – who transferred the tokens. And since he is believed to be holding about 1.1 million of early-mined bitcoin, traders anticipated a massive dump was incoming.
The price fell $500 in just 15 minutes on Wednesday and – since then – has failed to revive its short-term upside bias. Additionally, a weak buying demand near the $10,000-resistance controlled bulls from flourishing Bitcoin’s recovery.
The cryptocurrency is up by more than 130 percent since March 13, 2020.
Robust Support, Negative RSI
Its latest decline has pushed Bitcoin towards a tight support area on a weekly chart. As shown in the table below, the cryptocurrency is attempting a pullback near its 50-week moving average (the blue curve).
The blue wave has earlier supported bitcoin from falling further. At the same time, the cryptocurrency testing the 50-WMA coincides with its Relative Strength Indicator (RSI), which is testing its long-term support (green horizontal line). An RSI reading below 53 could mean an extended downtrend.
Therefore, bitcoin needs to hold a floor near the 50-WMA to retest $9,500-10,000 range. Otherwise, the cryptocurrency risks pushing the RSI below 53, leading to a negative slope. That would mean bitcoin falling below $6,000 – towards the 200-weekly moving average.
Meanwhile, a pullback to the upside followed by a breakout above $10,000 could improve bitcoin’s short-term bullish stance. That is a big call given the cryptocurrency’s latest rejections near the level, but targets levels above $10,500.