Bitcoin Drops Below $82,000 Support Amid US Reserve Disappointment

Bitcoin is facing potential downside volatility as it risks closing the week below the crucial $82,000 support level. This situation arises from investor disappointment following the announcement of the US Strategic Bitcoin Reserve, which relies on cryptocurrency forfeited in government criminal cases rather than actively acquiring Bitcoin through market purchases. This approach has led to a near-term negative market reaction and a decline in Bitcoin’s price, as investors had anticipated that federal accumulation of Bitcoin would signal strong institutional support, potentially driving prices higher. However, the reliance on existing holdings without additional investments has tempered these expectations.

The sensitivity of cryptocurrency markets to government actions and policies is evident in this scenario. Bitcoin needs to close the week above the key $82,000 support to avoid a further decline due to this short-term investor disappointment. The lack of significant price momentum, with Bitcoin trading under the $90,000 psychological mark since March 7, adds to the uncertainty. Closing the week above the key $82,000 support may signal a shift in Bitcoin sentiment as investors digest the nuances of the Bitcoin reserve proposition, which may still see the inclusion of “budget-neutral strategies” to buy more Bitcoin.

Beyond crypto-related legislation announcements, Bitcoin price continues to be pressured by macroeconomic developments and global trade concerns. Bitcoin’s short-term movements will be heavily influenced by macroeconomic factors, with key US economic events such as the Consumer Price Index and the job openings report expected to signal a slowdown in inflation and the potential for interest rate cuts. A weekly close below $82,000 may introduce significant volatility for crypto markets, potentially triggering over $1.13 billion worth of cumulative leveraged long liquidations across all exchanges.

On the bright side, Bitcoin may be nearing its local bottom based on a key technical indicator, the relative strength index (RSI), which measures whether an asset is oversold or overbought. Bitcoin’s RSI stood at 28 on the daily chart, signaling that the asset is oversold. Each time Bitcoin’s RSI reached 28 during this current cycle, Bitcoin price would “either bottom or be between -2% to -8% away from a bottom.” This technical indicator suggests that Bitcoin may be approaching a bottom, providing a glimmer of hope for investors amidst the current market uncertainty.