Bitcoin (BTC) has had a bad start to August, falling more than 14% so far. This has been fueled by several negative macroeconomic factors, including rising interest rates in Japan, weak U.S. employment data, and geopolitical tensions in the Middle East.
According to data provided by Cointelegraph Markets Pro and TradingView, Bitcoin fell to a seven-month low of $49,577 on Bitstamp after losing key support provided by the 200-day EMA and the $50,000 level.
Mass liquidations occurred as Bitcoin fell below $50,000 on August 5, with over $500 billion wiped from cryptocurrency markets.
At the time of publication, Bitcoin has recovered to $56,000 after finding support in the $54,000 zone, up 2.5% in the last 24 hours. This recovery has sparked optimism among Bitcoin analysts, who now believe that BTC has the potential to recover to higher levels.
“Bitcoin has broken its previous low and retested its January high,” Bitcoin analyst Zell wrote on the X social media platform on August 6, adding that the price needs to rise above $57,000 again to ensure that “all is well.”
Fellow analyst Max shared the following chart on August 6th, which shows the Relative Strength Index (RSI) oversold on the daily timeframe.
Mags described the oscillating trend-following indicator as “the fifth time this cycle has entered a sell-off zone,” suggesting that BTC could recover as the downside momentum, supported by seller fatigue and dip buying, weakens.
“Every time the RSI drops below 30, it becomes a good opportunity to accumulate Bitcoin.”
Mustache shared similar sentiments, explaining that the RSI was sending bullish signals on the daily chart, suggesting a “buying opportunity.”
“This usually happens at low ranges.”
This was backed up by analysts at Kaiko in a post on August 5th, which stated that the recent sell-off was characterized by decreased buying on US-based cryptocurrency exchanges such as Coinbase, Gemini, and Kraken, as evidenced by the Cumulative Volume Delta (CVD).
A rising positive CVD (the total difference between the volume executed at buy price and the volume executed at sell price during a given period) indicates that buy volume exceeds sell volume.
“While overseas exchanges like Binance and OKX have seen strong sell-offs since Friday, the Cumulative Volume Delta (CVD) of BTC on most US platforms remains positive, suggesting some traders have been buying the dip.”
The recent BTC flash crash, which dropped below $50,000, was a 23.7% drop from the April 20 Bitcoin halving.
Veteran trader and analyst Peter Brandt said the recent post-halving correction resembles the 2015-2017 cycle, adding that if things play out in a similar fashion, we could see a “new bullish cycle high” in a few weeks.
Titan of Crypto believes Bitcoin has entered a “final capitulation” after experiencing a flash crash into a right-angled downward extending wedge bottom. The chart pattern predicted Bitcoin’s rally above $90,000.
“I wouldn’t be surprised if a salvation rally was held here.”
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.