Bitcoin under pressure as bears regain control

• Bitcoin is trading around $23,000, but selling volume below $23,200 caused a drop to $22,000.
• Silvergate’s financial woes negatively impacted leading crypto companies, contributing to BTC’s downward momentum.
• BTC could rally in weekend trading if it holds above the $22,200 support level.

Bitcoin (BTC) has been trading in a narrow range since the beginning of the week, trying to hold the $23,000 level. However, volume selling below $23,200 throughout the week saw BTC fall to $22,000.

The recent downward momentum in the crypto markets began when the financial problems of US crypto-focused company Silvergate Capital Corp (NYSE:SI) came to the fore. Leading crypto companies in the US decided to stop doing business with the bank, citing Silvergate’s problems. This development had a negative impact on the already stalled bitcoin price, causing a remarkable drop of 6% in one hour.

Looking at the latest situation, Bitcoin’s downward momentum continued to the second support zone, which we calculated at the beginning of the week based on last week’s price movement.

After Bitcoin fell as low as $22,000, selling was seen to stop at this point. BTC is expected to remain above the $22,200 support level ahead of US opening hours.

If BTC can hold above this support price, a rally could be possible in weekend trading. While the market is currently in a wait-and-see mode, a daily close above the $22,700 level could be the first step towards a recovery. A move to $23,200 – $23,700 could then have the effect of reversing bitcoin’s short-term negative outlook.

Meanwhile, the Stochastic (RSI) on the daily chart is floating in the oversold territory. If the Stoch RSI rises above 20 in a potential buy trade, it could be an important signal for BTC’s recovery.

However, BTC is technically negative at the moment. Hourly close below the $22,200 average will increase the likelihood of a bearish move. As such, we could see BTC falling as low as $21,600, the February support level.

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In the short term, the $21,250 average remains the main support for BTC. While the 3-month exponential moving average protects this price zone, it is also the third support price on a weekly basis.

Considering that bitcoin’s January rally accelerated with a price above the 3-month EMA, this $21,300 moving average today could be a critical indicator of BTC’s new direction.

In summary, as long as Bitcoin has the range of $21,200 – $21,300, it will continue the recovery process. Daily bars below this level could see another bearish momentum begin below $20,000.

Dissemination: The author does not own any of the securities mentioned.

Written by:
Günay Caymaz/Investing.com