Bitcoin (BTC) – Has scope for a meaningful recoveryPosted on Wednesday, May 4 2022 at 9:53 pm GMT+0000
Bitcoin’s (BTC) volatility dropped critically as reflected by the ATR indicator, which has been aggressively declining since last December. Additionally, during the first quarter of this year, the crypto leader’s volatility clocked in at 3.45%, remarkably lower than the levels reached in the same quarter of 2020 and 2021 where it reached 4.40% and 4.68% respectively. And although it’s still higher than the 2.70% reached in the first quarter of 2019, it became evident lately that under the current market circumstances of the weaker growth and higher inflation, Bitcoin’s volatility has been remarkably affected.
Nurturing the above is the price action on the daily chart. The crypto-king has been ranging somehow slightly above the critical 37,100 level for the last couple of weeks. The vast sell-off triggered by the March 28th peak led the price well below the negatively aligned 100- and 200-day exponential moving averages, sponsoring a negative tilt in the coin. Glancing at the oscillators, however, some consolidation or an upside reversal cannot be ruled out, as the MACD, south of the zero threshold, is hovering hand in hand with its trigger line and has shown some signs of improvement lately. Furthermore, the RSI reversed higher, approaching the 50-neutral mark.
So, if buyers generate the required traction to push the price higher, initial upside constraints could arise from the tough 42,000 – 43,650 resistance area, which encompasses the 100- and 200-day exponential moving averages and the April 21st high. Climbing further, the bulls may then face the February peak of 45,900 before challenging the March 28th top of 48,200.
However, in the bearish scenario, where sellers steer the price decisively underneath the 37,400 – 37,100 support area, the door will then open for a retest of the crucial 34,300 – 33,000 region linked to the February and January lows. Cracking that floor, the bears will then target the 30,000 – 28,600 section.
All in all, as long as Bitcoin stands above the 37,100 hurdle, there is scope for a meaningful recovery. However, a significant drop below the aforementioned barrier will dash such hopes.