Bitcoin might be approaching highly volatile territory

Bitcoin dropped approximately 12% from its recent highs. By doing so, it retraced toward its 50-day SMA, which acts as an important support level. In addition to that, MACD, Stochastic, and RSI started forming bearish structures on the daily chart, causing us to be very cautious. Due to that, we will pay close attention to the stock market (especially Nasdaq 100), which continues to be highly correlated with Bitcoin and may spell more trouble for cryptocurrencies if it manifests weakness. Furthermore, we will monitor volume and technical indicators to give us more clues as to where Bitcoin is headed next. Overall, our stance has not changed. We continue to think that over the past few months, we have seen one of the most deceitful bear market rallies, and Bitcoin is due to see new lows in 2023. However, it is also still premature to declare a victory. Therefore, we emphasize caution as we believe the market might be approaching a highly volatile territory.

Illustration 1.01
Illustration 1.01 displays the daily chart of BTCUSD and 50-day SMA. Yellow arrows indicate bearish breakouts below critical support levels. We will pay close attention to the 50-day SMA and its ability to stop selling pressure. If it fails, it will be bearish. Contrarily, if it succeeds, it will be bullish, and Bitcoin might attempt to retest 30 000$.

Illustration 1.02
Illustration 1.02 shows the daily chart of MACD. If it breaks below the mid-point, it will bolster the bearish case.

Technical analysis
Daily time frame = Bearish
Weekly time frame = Neutral

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.