Bitcoin’s price shows signs of recovery from recent lows but struggles to break through the significant resistance level at $85,000.
As of Saturday, Bitcoin (BTC) reached $84,525, marking a 10% increase from its monthly low. Nevertheless, it remains within a local bear market, having fallen over 22% from its peak this year.
At the time of writing, Bitcoin is trading at approximately $84,335.
On Friday, Bitcoin and several altcoins experienced a slight uptick, paralleling gains in traditional markets. The Dow Jones index surged over 650 points, while the S&P 500 and Nasdaq 100 increased by 117 and 450 points, respectively. Notably, gold reached a record high of $3,010.
Bitcoin Price Faces Risks Ahead
The recovery of Bitcoin is challenged by two primary risks and two potential opportunities. Firstly, investor sentiment remains cautious, with the fear and greed index having moved out of the extreme fear zone of 18 but still indicating fear at 22. Historically, Bitcoin and other cryptocurrencies perform well when the index reflects greed, underscoring the current cautious atmosphere that has contributed to spot Bitcoin ETFs losing $143 million in assets, totaling $870 million in outflows over the past week.
Secondly, a death cross has developed, indicated by the intersection of the 50-day and 200-day Weighted Moving Averages. This technical pattern often suggests further downside, with the possibility for Bitcoin to retest the March 2024 high of $73,900.
Opportunities for Bitcoin’s Growth
One potential opportunity for Bitcoin lies in the upcoming Federal Reserve meeting scheduled for March 18-19. Should the central bank adopt a dovish stance in response to recession concerns, it could signal future interest rate cuts, benefiting Bitcoin and altcoins.
Additionally, a shift toward a risk-on investment mentality could prompt investors to buy the dip in both the stock and crypto markets. With the most significant risks related to tariffs already factored into market valuations, many investors may look to capitalize on current price reductions. This pattern mirrors the market’s behavior during the COVID-19 pandemic when investors initially sold off assets before seizing opportunities to buy at lower prices as the Fed adopted a dovish approach.
