If Bitcoin closes this week below the crucial $82,000 support level, it could experience heightened downside volatility, as investor sentiment remains muted following the short-term letdown regarding the US Strategic Bitcoin Reserve.
On March 7, President Donald Trump issued an executive order detailing a plan for a Bitcoin reserve, intended to use cryptocurrency seized in government criminal cases instead of actively purchasing Bitcoin (BTC) from the market.
This absence of direct federal investment in Bitcoin has resulted in a “short-term negative market reaction and a price drop for Bitcoin,” as stated by Bitfinex analysts.
To avert further decline tied to this initial investor disappointment, Bitcoin needs to finish the week above the critical $82,000 support level, the analysts told Cointelegraph, adding:
“Investors had expected federal acquisition of Bitcoin to indicate robust institutional support, potentially pushing prices upward. However, relying solely on existing reserves without any new investments has dampened these expectations.”
“It highlights the sensitivity of cryptocurrency markets to governmental actions and policies,” the analysts further explained.
BTC/USD, 1-month chart. Source: Cointelegraph
In the meantime, Bitcoin has shown little significant price momentum, remaining below the $90,000 psychological threshold since March 7, the day Trump hosted the inaugural White House Crypto Summit.
A weekly close above the vital $82,000 support may indicate a change in Bitcoin sentiment as investors assess the details of Trump’s Bitcoin reserve proposal, which could still incorporate “budget-neutral strategies” for purchasing additional Bitcoin.
Related: Trump transformed crypto from an ‘oppressed industry’ to a ‘centerpiece’ of US strategy
Macroeconomic factors impact Bitcoin price
In addition to cryptocurrency-related legislative announcements, Bitcoin’s price continues to be affected by macroeconomic trends and global trade issues, according to Iliya Kalchev, a dispatch analyst at the digital asset investment firm Nexo.
“Bitcoin’s short-term movements will be significantly impacted by macroeconomic factors,” the analyst informed Cointelegraph:
“Next week, attention will focus on major US economic indicators, including the Consumer Price Index, anticipated to suggest a slowdown in inflation, and the job openings report, which is crucial for gauging labor market strength and the potential for interest rate reductions.”
Related: Rising Bitcoin activity suggests market bottom, potential reversal
Nonetheless, if Bitcoin closes below $82,000 for the week, it could introduce significant volatility across crypto markets.
Bitcoin Exchange Liquidation Map. Source: CoinGlass
A drop in Bitcoin price below this level could trigger over $1.13 billion worth of cumulative leveraged long liquidations across all exchanges, according to data from CoinGlass.
On a positive note, Bitcoin might be approaching its local bottom as indicated by a crucial technical metric, the relative strength index (RSI), which assesses whether an asset is oversold or overbought.
BTC/USD, 1-day chart, RSI. Source: Rekt Capital
The RSI for Bitcoin was recorded at 28 on the daily chart, indicating that the asset is oversold. According to popular crypto analyst Rekt Capital in a March 8 post on X, each instance Bitcoin’s RSI hit 28 during this cycle resulted in the price either bottoming out or being within -2% to -8% from that bottom.
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