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  • BTC/USD staged an impressive recovery after a flash-crash.
  • The coin’s fate hinges on its ability to stay above SMA200 weekly.

Bitcoin (BTC) continues trading in a volatile fashion. The first digital coin has gained over 16% since the beginning of the day, though it is still down 18% on a day-to-day basis. At the time of writing, BTC/USD is changing hands above $5,600, however, several hours ago the price was as low as $3,800. This roller-coaster has left the community puzzled as to what comes next.

Read also: Bitcoin train wreck continues: What’s going on?

While the reasons for the sell-off is somewhat clear – most of them boil down to correlation with the traditional financial markets and massive liquidations of leveraged position – the nearest future is even more uncertain than ever. The forecasts range from “going down to zero” to “to the moon we go”, while the truth is somewhere in between. 

Wayne Trench, chief executive of digital asset brokerage and exchange operator OSL commented (as cited by Bloomberg):

This sell-off has caused cascading margin calls with the vast majority of investors shifting to exposure to cash.  In this situation, correlation converges to 1 and even impacts potential ‘safe havens’ like gold and Bitcoin to varying extents.

BTC/USD: Technical picture

From the long-term point of view, BTC/USD managed to return to the area above SMA200 weekly, which is definitely a positive signal for the coin. Basically, the price needs to stay above $5,500 to avoid the immediate realization of the worst-case scenario and enter a period of range-bound trading before another bullish leg towards $6,000 and $6,432 – the lowest level of 2019. 

However, the RSI on daily chart points to the South, which means that the downside pressure is still strong. Considering the high level of anxiety, traders are ready to hit the panic button any minute, which makes Bitcoin vulnerable to the sell-offs. If the price moves below $5,500, the increased downside pressure may push it to $5,000 with the next interim support at $4,700, followed by $4,000 and the recent low at $3,880.

BTC/USD daily chart

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