Bitcoin price analysis for February 24-March 1: the coin could remain volatile with a negative bias
Bitcoin is struggling to sustain the rebound off the 20-day EMA as traders are booking profits at higher levels. This may result in a range-bound action for a few days
North America’s first Bitcoin exchange-traded fund debuted on the Toronto Stock Exchange on February 18 and its assets under management have ballooned to $564m, according to Glassnode data. These numbers show the huge popularity of Bitcoin, even when the price has been in a corrective phase.
Bitcoin also hit the $1trn market capitalisation on February 19 for the first time. As Bitcoin continues to grow in size, it is bound to attract institutional investors who may want to join the party.
While everything seemed to be going in its favour, trader sentiment was dampened when the Tesla CEO tweeted that the price of Bitcoin and Ether seemed “high.”
Additionally, US Treasury Secretary Janet Yellen’s statement that Bitcoin is an “extremely inefficient way of conducting transactions” could have further intensified selling.
However, Fundstrat’s Tom Lee believes that 40 to 50 per cent corrections are a part of Bitcoin’s DNA. Lee anticipates Bitcoin to eventually reach $100,000.
While analysts remain bullish for the long term, let’s do the Bitcoin price trend analysis of the weekly chart to determine its short-term price movement.
Bitcoin price technical analysis: weekly chart
Bitcoin rallied 18.17 per cent last week to close at $57,489, just shy of the all-time high at $58,341.75 hit on February 21.
After four weeks of a successive rally, the BTC/USD pair is currently witnessing profit-booking. The bulls are attempting to arrest the decline at $44,866.45, just above the 50 per cent Fibonacci retracement level at $43567.47
If buyers can sustain the price above $50,000, the sentiment could improve and the pair will attempt to resume the uptrend. A breakout and close above $58,341.75 could result in a rally to $60,800.
However, the negative divergence on the relative strength index (RSI) suggests the momentum is weakening. If bears can sink the price below $43,567.47, the decline could extend to the 61.8 per cent retracement level at $40,086.64.
What is your sentiment on BTC/USD?
A break below this support could intensify selling and the pair may then drop to the 20-week EMA. The Bitcoin price weekly analysis shows the first signs of profit-booking. Let’s perform the BTC price analysis of the daily chart to see if it confirms that a bottom is in place?
Bitcoin price technical analysis: daily chart
The bulls are aggressively buying the dip to the 20-day EMA, which shows that the sentiment remains positive. However, if the buyers fail to propel the price to a new all-time high, the bears may again sell on rallies.
If the bears can sustain the price below the 20-day EMA, it may force several aggressive bulls, who have purchased the current dip, to cover their positions. If that happens, the selling could intensify and pull the price down to the 50-day SMA.
The 20-day EMA is flattening out and the RSI has also dropped below 58, indicating a balance between supply and demand. This balance will tilt in favour of the bears if they can sink the price below the 50-day SMA. If that happens, the pair could correct the entire leg of the up-move and drop to $28,800.
Another possibility is that the pair could consolidate in a large range between $44,000 and $58,000.
How to trade Bitcoin this week
Bitcoin has entered a corrective phase and is not showing any signs of having bottomed out. Although traders are buying the initial dip, the possibility of a deeper correction is high as the rebound off the 20-day EMA is not sustaining.
Therefore, traders may remain on the sidelines and wait for a bottom to be confirmed before initiating fresh long positions.
Trade Bitcoin to US Dollar - BTC/USD chart
FURTHER READING: Bitcoin explained simply: everything you need to know
FURTHER READING: Bitcoin crash: is the bull run over?