Bitcoin rose to $84,525 on Saturday, up more than 10% from its lowest level this month. It remains in a local bearish trend after falling more than 22% from its highest level this year.
It was trading at a little over $84,335 at press time. Bitcoin and other altcoins rose modestly on Friday, mirroring the performance of other assets such as stocks and gold. The Dow Jones Industrial Average rose more than 650 points, while the S&P 500 and Nasdaq 100 rose 117 and 450 points, respectively. Gold hit a record high of $3,010.
There are two potential risks and two opportunities facing Bitcoin's recovery. First, there are signs that investors are still in a state of fear. Although the Fear and Greed Index has moved out of the zone of extreme fear to 18, there are signs that investors are still fearful. That fear zone remains in 22.
Historically, Bitcoin and other cryptocurrencies perform well when the index is in the greed zone. This fear explains why the spot Bitcoin ETF assets are losing $143 million, bringing their weekly outflow to $870 million. Withdrawals have been occurring for the past five weeks.
Second, Bitcoin technically formed a death cross when the 50-day and 200-day weighted moving averages crossed. This intersection often leads to more downside over time. In Bitcoin's case, there is still room to retest its all-time high of $73,900 set in March 2024.
For an initial look at Bitcoin, investors would be wise to watch what the Federal Reserve reports at its second meeting of the year on March 18-19. Fears of a recession could prompt the central bank to adopt a dovish stance and signal further interest rate cuts. A change in the Federal Reserve’s stance would be a positive development for Bitcoin, altcoins and other altcoins.
Another possibility is that investors could adopt risk sentiment and buy on dips in the stock and crypto markets.
This is because the most extreme tariff risk has now been priced in, with the stock market having lost trillions of dollars.
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