Wednesday, February 28, 2024
Market Analysis

Bitcoin erodes 4% gains as BTC price downside targets stretch to $23K

Bitcoin (BTC) traded near $28,000 on May 28, with traders still wary of a full correction of weekend upside.

BTC/USD 1-hour candle chart on Bitstamp. Source: TradingView

BTC shorts increase as $28,000 slips

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD cooling volatility after a last-minute surprise saw action around the weekly close.

With United States markets closed for the Memorial Day holiday, crypto markets were quieter — traders were waiting for a Congressional vote on the proposed deal to extend the U.S. debt ceiling.

Bitcoin, up 4.4% on May 28, meanwhile, failed to convince everyone that bulls might now have the upper hand.

BTC/USD annotated chart. Source: Crypto Tony/Twitter

Uploading a potential BTC price roadmap to Twitter, popular trader Crypto Tony called a move back to as low as $23,000 “still very much a possibility.”

“IF we close back below $27,500 i will close my long and look for a short position,” he told followers in part of the day’s updates.

Trading suite DecenTrader further noted that short positions were increasing, despite May 28 liquidating more positions than any day in a month.

On-chain monitoring resource Material Indicators nonetheless cautioned over dismissing the uptick as fakeout.

“As someone who frequently uses the phrase #WildWestWeekend in #Crypto, I actually believe the #Bitcoin PA we’ve seen for the past few days is legit for multiple reasons including the fact that the bounce came from key technical support at the 200-Week MA, and the #DebtCeiling deal announcement,” part of commentary read.

Material Indicators referred to the 200-week moving average still acting as support, one of several such support points near $26,000 on traders’ radar.

An accompanying chart showed the Binance BTC/USD order book, with increasing bid liquidity entering at $27,000.

BTC/USD order book data for Binance. Source: Material Indicators/Twitter

U.S. dollar works overtime

Despite the Wall Street holiday, U.S. dollar strength continued to play out in a trend that formerly spelled significant headwinds for crypto asset performance.

Related: Mining difficulty passes 50 trillion — 5 things to know in Bitcoin this week

With the current trend forming something of an exception, Bitcoin brushed off a trip to 104.5 for the U.S. Dollar Index (DXY), the latter’s highest since mid-March.

U.S. Dollar Index (DXY) 1-day candle chart. Source: TradingView

“The Dollar has bounced lovely since the double bottom put in back in April,” Crypto Tony added about the index.

“My area of resistance i expect us to reject from is coming up at $105.80. Over the next few months though i do expect a strong dollar, but to roll over into next year.”

U.S. dollar index (DXY) annotated chart. Source: Crypto Tony/Twitter

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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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