The Bitcoin (BTC) price was hit hard over the weekend as traders and investors were obliged to sell the only asset they could during a weekend of US bombing of Iranian nuclear installations and a threat from Iran to close the commercially critical strait of Hormuz.
Bitcoin was all there was to sell
Bitcoin’s superpower of being able to be traded 24/7 and over every weekend can sometimes be prejudicial to the king of the cryptocurrencies. As the US joined the Israeli strikes on Saturday by dropping “bunker busting” bombs and launching Tomahawk cruise missiles, scared investors began to sell the only liquid and tradeable asset in their portfolios, which was Bitcoin.
Then on Sunday, the Iranian parliament voted to close the Strait of Hormuz, a critical chokepoint for world trade. Bitcoin dropped further on the news. However, the final decision for whether to close the Strait rests with Iran’s Supreme National Security Council, which would have to bear in mind that closure of the Strait of Hormuz would risk alienating oil-rich neighbours and could lead to an 80% spike in oil prices.
Bitcoin price rally
After being heavily oversold on Saturday and Sunday, the Bitcoin price has rallied on Monday morning, up 3% and $3,000 from Sunday’s low of $98,300, to currently trade at around $101,400. It now remains to be seen whether this rally can continue, or whether further events in the Middle East can stunt Monday’s price rise.
$BTC moves through descending trendline
Source: TradingView
The short-term time frame for $BTC illustrates the beginning of a recovery. The price has moved up through the downtrend and is in the process of confirming and consolidating above. In addition, the price is taking advantage of flipping the $101,000 resistance into support.
If the recovery is able to continue, this will likely depend on how the U.S. stock market performs over the rest of Monday. So far, the S&P 500 is up around 0.3%, which bodes well for the $BTC price going forward.
Stochastic RSI indicators cross-up on daily time frame
Source: TradingView
The daily time frame for $BTC shows the strong overhead resistance levels, first at $104,000, and then at $106,000. If the U.S. stock market continues to make light of the weekend conflict developments, the $BTC price could get to the first of these big resistances at $104,000.
At the bottom of the chart, the Stochastic RSI has just recorded a cross up of the blue fast line over the orange slow line. These indicator cross-overs on the daily have presaged some big moves in the past as can be seen in the chart above.
Major concerns on weekly time frame
Source: TradingView
The weekly chart view for $BTC shows that the $104,000 support did not hold the price, and that it crashed through, eventually being held up by the strong support at $101,000. In order for the bulls to regain control, they will need to retake the $104,000 level and turn it back into support again. That said, the current support at $101,000 is going to have to hold firm.
The bears will be exulting that not only did they manage to break the support, but they also caused the Stochastic RSI indicator lines to dip below the 80.00 level. This is critical, because if these indicator lines do not turn back up, there could be a long descent back down to the bottom, which is likely to drag the price down with it. This new week of price action could prove to be crucial.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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