Bitcoin price is bouncing back as investors rush to buy the dip following the weekend turmoil. BTC is trading at $20,610, which is about 15.80% above the lowest level during the weekend. Its market cap has jumped to about $393 billion.
Why is BTC bouncing back?
Bitcoin had a horrible weekend as demand for the coin dipped below the $20,000 key support level and the 2017 high of $19,700.
The sell-off was triggered by a number of unfortunate events. First, the Federal Reserve made a 0.75% rate hike and officials warned that a similar hike will happen in July. Historically, risky assets like Bitcoin and stocks tend to underperform in a period of high-interest rates.
Second, Bitcoin declined after the latest implosion of companies like Celsius and Three Arrows Capital. Celsius was a leading cryptocurrency lender that had over $10 billion in assets under management at its peak.
Last week, Celsius said that it was suspending withdrawals and swaps as it struggled with liquidity issues. It then hired restructuring experts to help it handle the situation. Now, the company is putting a brave face as the crisis escalates.
Meanwhile, Three Arrows Capital, a major crypto hedge fund that held over $10 billion, is slowly closing its doors. According to the wall street journal, the company plans to sell assets as its liquidity problems continue. The company had to deal with several margin calls.
The current Bitcoin price recovery should be taken with a grain of salt. While many people are now buying the dip, this rebound is part of what is known as a dead cat bounce. Ideally, this is a bounce that happens after a strong sell-off.
Bitcoin price prediction
The daily chart shows that the price of BTC saw a sell-off last weekend as sentiment in the industry weakened. As it fell, it broke below the important support level at $28,776, which was the low level in July last year.
Bitcoin has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point. The Relative Strength Index (RSI) has moved below the oversold level as well.
Therefore, the BTC pair is likely to continue falling as the bears target the key support level at $15,000. A move above the resistance at $22,000 will invalidate the bearish view.
