Bitcoin Faces Potential Bearish Divergence
An analyst has identified a bearish divergence formation in the Bitcoin daily chart, indicating a disconnect between price and momentum. With bears currently in control of the market, there is a higher likelihood of prices dropping further beyond the current lows.
To sustain the ongoing uptrend and provide relief for bulls, Bitcoin needs to close above $70,300. This could slow down the current sell-off and align prices with the dominant trend observed in recent months.
Several fundamental factors are expected to shape Bitcoin’s short-to-medium-term price trajectory. One key factor is the direction of monetary policy, which will be influenced by the Federal Open Market Committee (FOMC) meeting in the United States on [March 20]. The outcome of this meeting could have a significant impact on Bitcoin’s price.
The recent decision by the Bank of Japan (BoJ) to raise interest rates for the first time since 2007 has also caused market shockwaves. This move suggests that global financial conditions are still tight, despite some optimism. However, the BoJ has indicated that they plan to keep interest rates at their current levels as long as financial conditions remain stable.
Grayscale Outflows and Spot ETF Demand
In addition to monetary policy, analysts have observed outflows from Grayscale totaling approximately $154 million on March 18. This marks the first total outflow since March 1. Data from Lookonchain indicates that Grayscale released more coins than other spot Bitcoin exchange-traded fund (ETF) issuers purchased.
At the same time, there has been a decrease in capital flowing into spot Bitcoin ETFs, which could have a bearish impact on BTC. Since its launch in January 2024, Bitcoin prices have largely been driven by demand for spot ETFs.
Currently, Bitcoin prices are facing significant selling pressure and are approaching the $60,000 support level. Whether or not bears will continue to push prices lower remains uncertain. However, the overall crypto market remains bullish, and the upcoming halving event is expected to generate demand and drive prices higher.
Hot Take: Bitcoin Could Drop to $59,000 to $62,000 Support Zone
According to one analyst, there is a high probability that Bitcoin could drop from its current levels to as low as the $59,000 to $62,000 support zone if bulls fail to reclaim $70,300. This would represent a 20% drop from the all-time highs of $73,800.
It is crucial for bulls to regain control and push prices above $70,300 in order to sustain the uptrend. Otherwise, further downside movement is likely.
The outcome of the FOMC meeting and any changes in monetary policy will be key factors influencing Bitcoin’s price in the short-to-medium term. Additionally, the actions of institutional investors like Grayscale and the demand for spot ETFs will play a significant role in shaping Bitcoin’s trajectory.
While there may be selling pressure currently impacting Bitcoin’s price, the overall sentiment in the crypto market remains positive. The upcoming halving event is expected to drive demand and potentially lead to higher prices in the future.
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