Buy the drop or wait for the maximum impact? Analysts debate whether bitcoin price has bottomed

It’s been a tough week for the cryptocurrency market, largely due to the collapse of the Terra ecosystem and its knock-on effect on Bitcoin (BTC), Ethereum (ETH) and altcoin prices, in addition to panic selling that took place after stablecoins lost their peg. to the US dollar.

Bearish headwinds have been building for the crypto market since late 2021 as the US dollar strengthened and the Federal Reserve indicated it would hike interest rates later in the year.

According to a recent report from Delphi Digital, the 14-month RSI for DXY has now “crossed above 70 for the first time since late 2014 into 2016.”

Performance of the DXY Index. Source: Delphi Digital
Buy the drop or wait for the maximum impact?  Analysts debate whether bitcoin price has bottomed
Buy the drop or wait for the maximum impact? Analysts debate whether bitcoin price has bottomed

This is notable as 11 of the 14 instances where this occurred previously “resulted in a stronger dollar ~78% of the time over the next 12 months,” suggesting a possible worsening of wealth pains.

On average, the DXY gained about 5.7% after its RSI surged above 70, which according to the May 13 reading “would take the DXY index just below 111, its lowest high since 2002.”

BTC/USD Index vs. DXY (inverted) and a 60-day moving correlation. Source: Delphi Digital

DelphiDigital said,

“Assuming the correlation between DXY and BTC remains relatively strong, this would not be good news for the crypto market.”

Bitcoin is in a key area for price bottoms

Taking a broader approach, BTC is now retesting its 200-week EMA near $26,990, which “has historically served as a key area for price bottoms,” according to Delphi Digital.

BTC/USD vs 200-week EMA vs 14-week RSI. Source: Delphi Digital

Bitcoin also continues to hold above its weekly long-term support area of ​​$28,000-$30,000, which has proven to be a solid area of ​​support during the recent market turmoil.

While many traders have been panic selling in recent days, Pantera Capital CEO Dan Morehead has taken the opposite approach and mention, that: “It is better when to buy [el] The price is well below the trend. Now is one of those times.

Bitcoin fund inflows relative to price action. Source: Twitter

morehead said

“Bitcoin has only been as ‘cheap’ or cheaper relative to trend 5% of the time since December 2010. If you have the emotional and financial resources, go the other way.”

However, Delphi Digital offered a caveat, noting that “the best opportunities or ‘deals’ in the market don’t last long.”

As BTC trades in the $28,000-$30,000 range for an extended period, “the longer we see price accumulation in these ranges, the more likely it is to continue.”

If another drop occurs, “Weekly structure and volume structure support at $22K-$24K” and “2017 re-all-time high $19K-$24K” are the next key supports.

DelphiDigital said,

“The first signs of surrender are appearing, but we cannot yet say that we are nearing the point of greatest pain.”

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