Bitcoin (BTC/USD) dropped to $34,000 over the weekend with a growing correlation to the US stock market. As the Federal Reserve’s policy rapidly changes in response to rising inflation, both conventional and crypto markets seem petrified.
Flagship crypto at its lowest RSI since March 2020
The last time Bitcoin’s daily RSI (Relative Strength Indicator) was so low was in March 2020, the time of the COVID crash. The weekly RSI of 37 shows the asset is oversold.
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According to Marcus Sotiriou, analyst at UK-based digital asset broker GlobalBlock, every bear market bottom for Bitcoin has ranged between 29-35 on the weekly RSI. This shows it’s time to buy for all those who believe in the long-term value of this asset class.
The MVRV ratio is currently at 1.50, showing 50% unrealised profits for Bitcoin wallets. Historically speaking, a ratio below 1 has signaled an end to the bear market, providing excellent buying opportunities.
Marcus Sotiriou commented:
I think the determination of a bull/bear market is not as clear as previous cycles, due to the structure of the market changing drastically with institutions entering the space. We are near the low end of the range in the low $30k region, which indicates that this the risk/reward here is advantageous to buy, in confluence with the RSI mentioned above.
Alex Axelrod, Founder and CEO of Aximetria, hopes for stability for Bitcoin despite market fears. He commented:
With Bitcoin’s price plunging to $33,184 over the past 24 hours, a price point that also marked the lowest level in the past 90 days, it is officially confirmed that the digital currency is now under the control of dominant sellers. Bitcoin’s recovery is a long shot as investors are keener on the price being stabilized for now. Hopefully, the coin can maintain support at $32,500 in its bid to retest the $40,000 resistance level in the next few weeks.
El Salvador leading the way again
On Friday, El Salvador bought Bitcoin for $15 million. The country has onboarded 4 million users for its government-backed Bitcoin wallet in just several months, which is almost two-thirds of its population. Considering less than a third have bank accounts, this is quite an achievement.
Sotiriou concludes that El Salvador’s impressive adoption rate will bring other countries to make Bitcoin legal tender in 2022 despite its current volatility.
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