In recent days, Bitcoin has faced a price drop, which some analysts suggest could be a buying opportunity according to long-term valuation tools.
Bitcoin Dip as an Opportunity
The Bitcoin Rainbow Chart, a long-term valuation tool, indicates the recent dip in Bitcoin’s price was a buying opportunity despite the prevalence of market fear. Bitcoin experienced a 6.89% bounce following the March 10th session, closing at $78.6k, but found significant resistance at the $84k level.
Market Analysis and Sentiment
Analysis of the price chart and liquidation levels shows that short-term consolidation is likely. The Bitcoin Fear and Greed Index is at 34, indicating a fearful market sentiment. Over the last week, the index has fluctuated between 30 and 40, reaching extreme fear at a value of 24 on March 11. Additionally, Bitcoin spot ETFs saw outflows of $900 million over the past five weeks, highlighting bearish market sentiment.
Short-Term Structure and Liquidation Levels
Examination of the 6-hour chart reveals a bearish short-term structure, with the $85k level acting as resistance over the past week. However, the A/D indicator shows an upward trend this month, while the price has trended towards $80k, indicating increased buying activity. The Awesome Oscillator suggests momentum is slightly bullish but insufficient to set trends. The 1-month liquidation heatmap identifies significant liquidity clusters at $100k and $71.7k-$72.3k. Closer to the current level, $86.3k and $76.3k may attract interest. Given Bitcoin’s bearish structure, a southern move seems likely, yet the A/D indicator hints at a possible bounce. A breakthrough beyond local resistance at $85k could shift market sentiment to bullish before a bearish reversal is initiated at the $86.3k zone.
Analysts suggest that despite bearish sentiment, the current situation could represent an opportunity for investors willing to take on risk. However, they hold back from providing specific action recommendations.
