Bitcoin experienced selling pressure after breaching the $90,000 resistance line last week, which increased its bearish movement and caused its price to drop back to $86K.
President Trump’s executive order on the U.S. Strategic Bitcoin Reserve surprisingly caused a steep decline in Bitcoin.
This was because there was no clear explanation of how the U.S. Bitcoin reserve would be financed.
Bitcoin’s Market Psychology
Bitcoin candlesticks have shown bullish underlying currents at multi-month lows, giving cryptocurrency bulls hope. Market actions showed Bitcoin’s decline stopped at the 200-day simple moving average support level.
- They are especially noteworthy given that last Tuesday and Friday’s daily candles had small bodies and long lower wicks, indicating bearish failures below the 200-day simple moving average.
- Price action highlighted that the pioneer crypto asset could reenter the $98K resistance mark if bulls hold above the $85K mark this week, which would likely pave the way for a bounce to the resistance level at $100,000.
The influx of funds into ETFs and developments on the Bitcoin Act from Senator Cynthia Lummis might outweigh the risks posed by tariffs and recession, potentially pushing Bitcoin beyond its record high of $109,354.
Conversely, opposition to the Bitcoin Act, an escalation in the trade war, or a more hawkish stance from the Federal Reserve could pull Bitcoin down below $80,000.
Bitcoin’s next support is located at $78,200. A further decline toward the $75,000 region could result in short sellers taking greater control of the market.
Historical On-Chain Readings
CryptoQuant described the market’s recent events as a “Trump-n-Dump.” After a rally sparked by an announcement about a U.S. Strategic Crypto Reserve, traders sold their digital assets in large quantities.
- President Trump announced on March 2 that the Presidential Working Group had been instructed to proceed with creating a Crypto Strategic Reserve, making the United States the global center of cryptocurrency. He reiterated his pledge by stating that the reserve would comprise Bitcoin, Ethereum (ETH), Solana (SOL), Ripple (XRP), and Cardano (ADA).
- The cryptocurrency assets selected for the reserve surged following the announcement. The following cryptocurrencies saw significant increases: ADA by at least 60%, SOL by over 20%, ETH by 20%, XRP by 40%, and BTC by 14%.
- All of the gains made during the rally had been erased as cryptocurrency prices dropped back to their pre-announcement levels. Traders hurried to sell their holdings on exchanges amid high selling pressure.
CryptoQuant claims that the large influxes into cryptocurrency trading platforms suggested that traders were liquidating their holdings to profit from the unexpected price increase.
Bitcoin, Ethereum, SOL, XRP, and ADA are currently declining by at least 3% daily, according to CoinMarketCap data. Curiously, these cryptocurrencies saw more significant declines on March 6 following Trump’s signing of an executive order creating a Digital Asset Stockpile and a Bitcoin Reserve in the world’s largest economy.
Reserves made up of crypto assets forfeited in criminal or civil proceedings. The U.S. government will not sell its cryptocurrency holdings or buy any more assets than those seized through forfeiture procedures.
Nevertheless, CryptoQuant maintains that despite U.S. economic decisions, increased demand is necessary for Bitcoin to see a sustained price increase.
