- BTC’s price fell to $27,400 following the sale of BTC holdings by the US government.
- Price chart readings suggest that the current price might be a good buying opportunity.
Bitcoin’s [BTC] price surged following the Bureau of Labor Statistics release of the Consumer Price Index (CPI) report on 10 May, which indicated a drop in annual inflation to 4.9% in April from March’s 5% and less than the anticipated 5%. However, the gains were short-lived as news spread that the US government divested its Bitcoin holdings, causing the cryptocurrency to rapidly lose value.
The US Government just sold 9.8k of #Bitcoin worth $277 million, causing the prices to plunge.
They still own over 200K $BTC – if they decided to sell that, prices would be back under $10K in a heartbeat. pic.twitter.com/9dnRp5c7S0
— WhaleWire (@WhaleWire) May 10, 2023
Read Bitcoin’s [BTC] Price Prediction 2023-24
These sell-offs led to widespread FUD in the market, causing words like “sell” and “bearish” to emerge as trending words on Santiment’s social trends.
However, according to the on-chain data provider, whenever these words emerge after the price of a crypto asset tumbles, good buying opportunities open up, and they can lead to a price uptick.
😨 #Crypto traders were panic selling today as #Bitcoin fell to $27.1K hours ago. But prices have shown recovery signs. Time & time again, we see prices rise when #FUD words like #sell & #bearish emerge. These moments generally are good buy opportunities. https://t.co/VUGfTICuff pic.twitter.com/ZymmDQV09z
— Santiment (@santimentfeed) May 10, 2023
To buy or not to buy?
According to data from CoinMarketCap, BTC traded at $27,403.54 at press time. While its price fell by 1% in the past 24 hours, trading volume was up by 56%.
This price/trading volume divergence showed that there was increased market activity. A higher number of trades were being made despite the price decrease.
However, new demand might be required to bring in the liquidity needed to initiate a price correction upwards. Without that, BTC’s price might continue to experience a decline.
An assessment of BTC’s price movements on a daily chart revealed that coin distribution outweighed accumulation.
At press time, BTC sellers had control of the market as the Negative Directional Indicator (red) of the coin’s Directional Movement Index (DMI) rested above the Positive Directional Indicator (green).
Also, BTC’s key momentum indicators were in downtrend positions below their respective neutral zones at the time of writing. For example, the Relative Strength Index (RSI) was 41.34, while the Money Flow Index (MFI) was 47.33.
Although coin distribution rallied significantly, two prominent indicators hinted at a possible buying opportunity.
Firstly, a look at BTC’s Bollinger Bands showed the leading coin’s price touching the lower band of the indicators. Whenever this happens to an asset, it often indicates that while the price may trade at a low, it could be a good time to buy.
Also, a divergence was spotted between BTC’s price and its Chaikin Money Flow (CMF) indicator. The CMF was in an uptrend at 0.05 at press time, while BTC’s price embarked south.
Generally, when an asset’s CMF diverges with a higher low and starts to increase, a buy signal is generated if the price action creates a lower low in oversold zones. Hence, this might be a good time to ape in on the coin.
Source: BTC/USDT on TradingView
