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- Has Bitcoin surpassed the danger phase?
The weekly chart for Bitcoin shows that the price is finding support around the 100-week exponential moving average at $85,769, where it has stabilized since the end of November. Bitcoin is currently trading at around $88,000.
If the 100-week exponential moving average holds at $85,769, the price of Bitcoin may extend towards the 50-week exponential moving average at $98,581.
The Relative Strength Index (RSI) on the weekly chart is at 37, which is still below the neutral level of 50, indicating continued seller dominance. However, the Relative Strength Index is stabilizing around this level, suggesting that selling pressure may be easing and the downward momentum is starting to weaken.
The weekly chart for the BTC/USDT pair
On the daily chart, Bitcoin price faced psychological resistance at the $90,000 level on Monday, but it found support at the 78.6% Fibonacci retracement level at $85,569, resulting in price fluctuations between these two levels so far this week. As of Friday, Bitcoin is trading above $87,900, after bouncing back following a retest of the $85,569 level.
If the price of Bitcoin drops and closes below the daily level of $85,569, the decline may extend towards the psychological level of $80,000.
The Relative Strength Index (RSI) on the daily chart indicates a level of 43, which is below the neutral level of 50, suggesting an increasing momentum in the downtrend. Furthermore, the Moving Average Convergence Divergence (MACD) showed a bearish crossover on Wednesday, supporting the bearish outlook.
The daily chart for the BTC/USDT pair
If the price of Bitcoin closes above the resistance level of $90,000, the recovery may extend towards the next major resistance level at $94,253.
Amidst the mixed feelings of institutional investors and the intense fear among traders, the "Copysale Letter X" published on Tuesday indicates signs of optimism regarding Bitcoin.
The report clarified that the general treasury account decreased to 78 billion dollars during the past week, marking the largest liquidity injection since June, as illustrated in the chart below. The analyst noted that the general treasury account is the main cash account of the U.S. government with the Federal Reserve, and that when it decreases, funds flow directly into the financial system, enhancing liquidity.
Furthermore, the Federal Reserve is injecting $40 billion into the economy by purchasing bonds. It will reinvest $14.4 billion from mortgage-backed securities principal payments to buy Treasury bills during the same period, thereby enhancing overall liquidity.
This wave of net liquidity injection into financial markets will make borrowing cheaper and encourage a shift towards risk-taking, especially in assets like stocks and cryptocurrencies, providing short-term support.