Bitcoin Price News: Relief Rally in Danger as BTC Drops Below $70K

Bitcoin (BTC) by 3.5% in the past 24 hours and is losing a key support at $70,000 as investors fear that higher oil prices could result in a spike in inflation.

Yesterday, the Chairman of the Federal Reserve, Jerome Powell, emphasized that the impact of the Iran war on the U.S. economy is still “uncertain”.

The central bank opted to keep rates unchanged, as the market expected. However, if oil prices push inflation higher, they could postpone this year’s planned interest rate cuts to the second semester or opt to keep rates flat until the situation in the Middle East resolves.

BTC ETF Inflows Turn Negative as Investors Get Depressed Again

Trading volumes for BTC have shot up by nearly 20% as a result of today’s drop, accounting for 3.5% of the asset’s circulating market cap.

In addition, net inflows to BTC-linked exchange-traded funds (ETFs) turned negative yesterday – the first time in 8 days.

Market sentiment has also been negatively impacted by today’s sell-off, as the Fear and Greed Index was pushed down from 46 (Neutral) to 29 (Fear). Long liquidations also shot up as Bitcoin is losing this key psychological threshold.

The selling pressure could endanger what we perceived as the beginning of a strong relief rally if BTC continues to dive to lower levels in the next few hours.

“Fakeout” Odds Rise as Bitcoin Losses $71,000 Support

In a recent Bitcoin price prediction, we highlighted that a break above the $73,000 level could put the top crypto on track to hit $85,000 over the next few days.

However, we expected that the $71,000 former resistance would hold. This was the last line of defense for BTC. Now that bears have managed to break past this key level, this recent move meets the criteria to qualify as a “fakeout”.

Momentum readings in the 4-hour chart have plummeted rapidly toward “oversold” territory, indicating that negative momentum is accelerating.

If BTC doesn’t recover above $70,000 today, it is highly likely that we will revisit the $60,000 threshold over the next few days.

Sell Signals Pile Up in the Hourly Chart

Moving down to the hourly chart, we got two consecutive “sell” signals. The first one was yesterday, ahead of the Fed’s presser, while the second one showed up right after the American session started today.

However, we are seeing some buying at $69,200. Hence, if the price bounces off this level, the sell-off might have hit a local bottom. On the other hand, if we get a bearish breakout, that would confirm the previous sell signal and could open up an interesting opportunity for a short-term trade.

If we expect a continuation of the downtrend toward the $62,000 level, this would give us a 3.5x risk-reward trade.

That said, at this lower time frame, the RSI is already hitting oversold. Hence, we could still see BTC recovering a bit before resuming its downtrend.

In contrast, if we get a bullish breakout above $71,500, our bullish scenario for Bitcoin would still be valid, as this latest move would turn into a “bear trap.” This is bullish for BTC in the near term as it could set the stage for a massive squeeze.