Bitcoin’s price made a slight recovery from its monthly lows but has found it challenging to break through the key resistance level of $85,000.
On Saturday, Bitcoin (BTC) reached $84,525, marking a 10% increase from its lowest point this month. Despite this uptick, it remains entrenched in a local bear market, having declined over 22% from its peak this year.
As of the latest update, it was trading at just above $84,335.
On Friday, Bitcoin and other altcoins experienced modest gains, reflecting the ascent of various assets, including stocks and gold. The Dow Jones surged more than 650 points, while the S&P 500 and Nasdaq 100 gained 117 and 450 points, respectively. Gold soared to an unprecedented high of $3,010.
Potential Risks for Bitcoin’s Price
The recovery of Bitcoin faces two key risks alongside two potential opportunities. Firstly, there are indications that investor sentiment remains cautious. Although the fear and greed index has moved out of the extreme fear territory at 18, it still indicates apprehension with a reading of 22.
Historically, Bitcoin and other cryptocurrencies tend to perform favorably when the index indicates a greedy sentiment. This prevailing fear is reflected in the significant outflow of $143 million from spot Bitcoin ETFs, totaling $870 million in weekly outflows over the past five weeks.
Secondly, on a technical level, Bitcoin has formed a death cross as the 50-day and 200-day Weighted Moving Averages have intersected. This formation often precedes further declines. In Bitcoin’s situation, there remains the potential to revisit $73,900, the peak noted in March 2024.
BTC price chart | Image source: crypto.news
Potential Opportunities for Bitcoin’s Price
The first opportunity for Bitcoin arises from expectations surrounding the Federal Reserve’s next moves after its upcoming meeting on March 18-19. Concerns over a potential recession may lead the central bank to adopt a more dovish stance, possibly signaling additional interest rate cuts.
A shift in tone from the Federal Reserve could positively influence Bitcoin, along with other altcoins.
The second opportunity lies in a possible risk-on attitude from investors, which would lead to increased purchasing of dips in both the stock and crypto markets. This optimistic sentiment could stem from the fact that the most severe risks associated with tariffs are likely already reflected in asset prices, following significant losses in the stock market.
Similar scenarios have occurred in the past, such as during the COVID-19 pandemic, when investors initially panicked and sold off stocks and cryptocurrencies in March 2020, only to buy back in once the Fed adopted a dovish stance.