Bitcoin price is bouncing back as investors rush to buy the dip following the weekend turmoil. BTC is trading at $20,610, which is about 15.80% above the lowest level during the weekend. Its market cap has jumped to about $393 billion.
Why is BTC rebounding?
Bitcoin had an awful weekend as demand for the coin plummeted below the key support level of $20,000 and the 2017 high of $19,700.
The sell-off was triggered by a number of unfortunate events. First, the Federal Reserve made a 0.75% rate hike and officials warned that a similar hike will happen in July. Historically, risky assets like Bitcoin and stocks tend to underperform in a period of high-interest rates.
Second, Bitcoin declined after the latest implosion of companies like Celsius and Three Arrows Capital. Celsius was a leading cryptocurrency lender that had over $10 billion in assets under management during its peak.
Last week, Celsius said that it was suspending withdrawals and swaps as it struggled with liquidity issues. It then hired restructuring experts to help it handle the situation. Now, the company is putting a brave face as the crisis escalates.
Meanwhile, Three Arrows Capital, a prominent crypto hedge fund had over $10 billion is slowly going out of business. According to the Wall Street Journal, the company is considering asset sales as its liquidity woes continue. The company has had to deal with several margin calls.
The current Bitcoin price recovery should be taken with a grain of salt. While many people are now buying the dip, this rebound is part of what is known as a dead cat bounce. Ideally, this is a bounce that happens after a strong sell-off.
Bitcoin price prediction
The daily chart shows that the BTC price had a major sell-off last weekend as sentiment in the industry waned. As it dropped, it moved below the important support level at $28,776, which was the lowest level in July last year.
Bitcoin has dropped below the 25-day and 50-day moving averages while the MACD has moved below the neutral point. The Relative Strength Index (RSI) has moved below the oversold level as well.
Therefore, the BTC pair will likely continue falling as bears target the key support level at $15,000. A move above the resistance at $22,000 will invalidate the bearish view.