The price of Bitcoin has made a slight recovery from its monthly lows, but it continues to face challenges in surpassing the critical resistance level of $85,000.
On Saturday, Bitcoin (BTC) reached $84,525, representing a 10% increase from its lowest point this month. Despite this rise, it remains entrenched in a local bear market, having declined over 22% from its peak this year.
As of the latest update, Bitcoin was trading at just above $84,335.
On Friday, Bitcoin and several altcoins saw modest gains, reflecting the overall upward trend of assets such as stocks and gold. The Dow Jones index surged by more than 650 points, while the S&P 500 and Nasdaq 100 climbed by 117 and 450 points, respectively. Gold prices soared to a historic high of $3,010.
Potential Risks for Bitcoin Price
Bitcoin’s recovery is met with two notable risks and two potential opportunities. First, signs indicate that investors remain in a state of anxiety. Although the fear and greed index has moved out of the extreme fear zone (18), it still hovers in the fear zone at 22.
Historically, Bitcoin and other cryptocurrencies tend to perform well when the index leans towards greed. This prevailing fear partly explains why spot Bitcoin ETFs have seen $143 million in asset outflows this week, totaling $870 million over the past five weeks.
Secondly, on a technical level, Bitcoin has formed a death cross, where the 50-day and 200-day Weighted Moving Averages have intersected. Such a crossover often leads to further downturns over time. In Bitcoin’s situation, there is still potential to retest $73,900, which marked the peak in March 2024.
BTC price chart | Source: crypto.news
Potential Opportunities for Bitcoin Price
Regarding opportunities for Bitcoin, investors should closely monitor the outcomes of the Federal Reserve’s second meeting of the year on March 18-19. Concerns over a recession may prompt the central bank to adopt a more dovish stance, signaling potential interest rate cuts ahead.
A shift in perspective from the Federal Reserve could bode well for Bitcoin, altcoins, and other cryptocurrencies.
The second opportunity lies in the possibility that investors will adopt a risk-on attitude and seize buying opportunities in the stock and crypto markets. This shift comes as the most extreme threats of tariffs seem to have been accounted for, following a considerable decline in the stock market’s value.
This pattern has been observed in the past, notably during the COVID-19 pandemic. Following initial panic selling in March 2020, investors returned to the market to buy the dip when the Federal Reserve adopted a highly dovish approach.
