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Is it time to invest now or wait and see? Bitcoin can decline lower, but long-term market patterns remain unchanged.
Bitcoin (BTC) fell below $50,000 once more on Thursday, as the fallout from Elon Musk’s critique lingered.
Traders wait for telltale buy signals
Data from TradingView confirmed BTC/USD failing to establish $50,000 as support after initially dipping to $45,650.
Musk, speaking as Tesla’s CEO, stated that the firm would no longer allow Bitcoin payments due to environmental issues.
BTC/USD recovered to around $52,000 after a three-hour slow crash before losing momentum once more. The pair was trading at about $49,500 at the time of publication, despite high uncertainty.
However, as previously noted, Bitcoin market patterns outside the short term have been unaffected by Musk and traders’ reactions to him.
It was thus time for successful trader Scott Melker to use a tried-and-true strategy for predicting when the market floor will be reached.
For this, he used the relative stength index (RSI), a classic indicator of overbought or oversold areas.
“I post this every time 4 hour RSI goes oversold and it works more times than not. An overbought bear div was the top,” he told Twitter followers.
“Now I want to see a lower low in price and a higher low on RSI. Could be this candle or take days, but it’s the signal I want.”
Thursday had already seen Bitcoin cancel its downtrend when it encountered the 21-week exponential moving average (21EMA). This line in the sand had held throughout the past year’s bull market and that of 2017 and is thought to provide reliable support for periods where bullish momentum sees a short-term retracement.
The 21EMA was still rising steeply this month, demanding that BTC/USD thus returns to setting higher highs and higher lows on weekly timeframes in order to preserve its usefuless.
Previously, a warning had given $40,000 as a potential low should $50,000 fail to hold.
Bitcoin bears battle essential moving average
Meanwhile, as investors rushed to “buy the dip,” attention turned to where large clusters of bids from whale buyers might also help buoy the price.
Bitcoin had paid no attention to whale positions north of $50,000 despite plenty of buying occurring as high as $58,000.
For monitoring resource Whalemap, however, the number of coins being transacted at a loss suggested that “panic” was already visible on the market even before the Musk episode.
“These moments have historically been good buying opportunities as they indicate panic on the market,” part of a tweet on Tuesday explained.
A look at buy and sell order configurations on Binance additionally showed retail investors now protecting $45,000, with $55,000 and upward becoming strong resistance.