Bitcoin suffered a sharp selloff early in the week as risk-off flows also dragged cryptocurrencies lower. For now, price is finding support around the $7,300 mark and could be due for a bearish correction.
Applying the Fibonacci retracement tool shows that the 50% to 61.8% levels span an area of interest or former support area that coincides with a descending trend line. If this area holds as resistance, bitcoin could resume the slide back to the swing low or lower.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. The gap between the indicators is widening to reflect strengthening selling pressure, and price is below both moving averages to confirm the presence of strong bearish momentum.
However, RSI is starting to pull up from the oversold region to show that buyers are starting to take over while sellers take a break. Stochastic is also heading north, so price could follow suit while bullish pressure builds up. This could be enough to keep the correction going until the nearby inflection points.
Bitcoin is also under pressure, along with the rest of the riskier assets like stocks and commodities as the flight to safety has driven up demand for more traditional safe-havens like gold and bonds. It doesn’t help that there have been some headlines on bitcoin scams and some naysayers dismissing the potential of the altcoin.
Still, some say that these declines could present opportunities to load up on long positions at much better prices ahead of the halving in May. Mining rewards are set to be cut in half, which could potentially lead to twice as much as value for the coin in the longer-run.
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