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 are discussing whether the Bitcoin price has bottomed out
As we quoted Cryptokoin.com , the Terra ecosystem collapse and its Bitcoin (BTC) ), Ethereum (ETH) and altcoin prices have caused a rough week for the panic sell-off after the on-chain impact watched stablecoins instability. 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 remarkable because 11 out of 14 cases where this has occurred before “lead to a 78% stronger dollar over the next 12 months” 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 to set bottoms
With a bigger picture approach, BTC is now “historically a key drop for price dips,” according to Delphi Digital. serving as an area” retests the 200-week EMA around $26,990.
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.
