Bitcoin Price Analysis: BTC/USD needs to reclaim $6,400 to avoid another major sell-off

• BTC/USD failure to stay above $6,400 worsened the technical picture.
• The sentiments on the global markets increase pressure on BTC.

BTC/USD climbed as high as $6,416 on Sunday; however, the upside momentum proved to be short-lived as the first digital coin swiftly dropped under $6,000 and settled at $5,800 by press time. BTC/USD has lost over 6% in recent 24 hours and stayed mostly unchanged on a day-to-day basis. 

Bitcoin goes with the rest

As the sentiments on the global financial markets are worsening, many traders expect further Bitcoin sell-off during the day. 

Coronavirus pandemic is getting worse in Europe and the United States, creating FUD (Fear, Uncertainty, Doubt) and forcing investors to cash out. FED announced an unprecedented stimulus package worth $4 Trillion, including small business loans, direct deposits, and enhanced unemployment insurance.

Huge rescue stimulus aimed at helping businesses and families survive the next 90 to 120 days of quarantine and social distancing. 

However, economists are worried that these measures won’t be nearly enough to stop the collapse comparable to the Great Depression. Goldman expects a 24% drop in Q2 GDP, while JP Morgan lowers the forecast to -14% in Q2. Worse yet, Federal Reserve Bank of St. Louis President James Bullard said that GDP may crash by 50%, while the unemployment rate hit 30% in Q2 due to massive shutdowns.

Obviously, his grim forecasts added some fuel to the fire and forced investors to sell their assets even harder. 

Many cryptocurrency enthusiasts claim that Bitcoin was created to serve as a safe-haven for such extraordinary situations. However, while the market is gripped with panic, it is vulnerable to further sell-off as speculators and short-term investors rush to exit.

We have to wait it out

Once investors are confident that fiscal stimulus and other measures taken by the governments are good enough to support the citizens and companies during a pandemic, they will start buying again. Large cryptocurrencies like Bitcoin will benefit from the improved sentiments and are likely to outperform stocks and other assets; however, now all are in the same boat that moves down.

BTC/USD: Technical picture

The initial barrier is created by $6,000. However, we will need to see a sustainable move above $6,400 for the upside to gain traction and bring $7,000 back into focus. A failure to develop a bullish momentum in the short run will increase the pressure and create a precondition for a sharper sell-off towards $5,400 that served as an upper barrier of the previous consolidation channel, and $5,000.

The RSI on a daily chart stays flat, which means that BTC/USD may continue moving in a side-channel around $6,000. 

BTC/USD daily chart