Yerevan (CoinChapter.com) — It was hard not to ignore Bitcoin’s incredible price decline last week. The cryptocurrency arguably entered its third bear market following a 27 percent decline on Wednesday. But then, out of nowhere, bulls bought the dip and pumped back the market by — again — 27 percent. Between its weekly high and weekly low, the bitcoin price, however, plunged by over 53 percent.
The flagship cryptocurrency continues to stay lower at the beginning of this new week. It has been consolidating sideways on more directional signals from the market. However, the bias remains conflicted. Some analysts believe that the BTC/USD exchange rate would rebound to a new record high as investors continue to seek a hedge against rising inflation.
Meanwhile, others see the pair as aggressively overbought on long-term timeframes, having rallied almost 825 percent since March 2020, even after its latest 45 percent price decline from the record high of $64,899 (data from Coinbase).
Bitcoin Oversold
But a classic indicator shows Bitcoin as an oversold asset. The Relative Strength Index (RSI) is now below 30 that signals traders to buy the underlying asset. The last time the RSI slipped below 30 was in March 2020, after which the price rebounded by — as mentioned above — almost 825 percent.
Some hopes of a rebound come from multiple keynote addresses at the annual Coindesk Consensus conference in the first half of this week. Speakers include Federal Reserve’s Board of Governors’ member Lael Brainard, MicroStrategy CEO Michael Saylor, ARK Invest’s Cathie Wood, and Bridgewater’s Ray Dalio.
The conference comes almost a week after Elon Musk scared investors into dumping their crypto holdings after announcing that his electric vehicle brand Tesla would discontinue its bitcoin payment option on environmental concerns. The billionaire investor also stated that he might have Tesla dump its entire $1.5bn worth of BTC holding.
Read more: Tesla’s Bitcoin Shock Offsets Supportive Inflation Data as Price Crashes to $46,000
Later, Musk refuted from his statement. But by then, Bitcoin had crashed to as low as $30,000 on Coinbase.
Bullish Backstop
Speakers at CoinDesk Consensus might do their bit to repair the ‘Musk FUD.’ Especially, with Fed’s Brainard speaking — a long-time advocate for crypto regulations in the US and one of the primary backers of the digital dollar plans — chances are that Bitcoin investors would respond actively to what she says about bitcoin after its price crash.
At the same time, Saylor, a software professional now sitting atop more than 92,000 BTC via his company MicroStrategy, would likely address fellow chief executives to project Bitcoin as a likely alternative to fiat-based inflation. Wood, whose Ark Invest recently dumped Apple shares to up its Coinbase stock holdings, would also likely remind investors of the benefits of holding Bitcoin long-term.
Read more: Elon Musk Caused Bitcoin Dump, But Hawkish Fed Minutes Could Accelerate It
That leaves the BTC/USD exchange rate under the influence of solid fundamentals, especially as it stands oversold. That could ensure a short-term bounce towards the 200-day simple moving average (the orange wave in the chart above). Nonetheless, the pair would trade amid fears of another bearish assault as long as it stays below 200-day SMA.
An extended decline would risk crashing BTC/USD towards $30,000, with a downside target near $27,000.
