Bitcoin suffered another leg lower in recent sessions, taking it down to the $6,500 long-term key support level. This could be the last chance for a big bounce if bulls return, as a break lower could set off a prolonged drop.
The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, support is more likely to break than to hold. However, the gap between the moving averages is narrowing to signal a potential upward crossover and return in buying pressure.
At the same time, stochastic is staring to climb out of oversold territory to suggest a possible bounce. RSI is also making its way back up so bitcoin might follow suit and pull up to the nearby inflection points at $7,200 then $8,000.
The dollar chalked up a strong rally late in the New York session as traders may be positioning ahead of the FOMC decision. CPI figures turned out slightly better than expected, supporting the idea of a faster pace of tightening.
An interest rate hike of 0.25% is expected this week and traders are likely to wait for more clues on the next set of tightening moves. It has been reported that Fed head Powell is looking into having a presser for every policy announcement in order to clarify the central bank’s forward guidance as previously suggested.
Meanwhile bitcoin continues to reel from the ongoing regulatory probe and the lack of any other positive update in the industry. Over the weekend, it was reported that a small South Korean exchange called Coinrail was hacked, reviving fears of security among cryptocurrencies.
Some say that this isn’t rock bottom for bitcoin yet as it could see more declines in the coming days. After all it has tumbled below one support area after another and this is usually enough to spook more investors into liquidating.