How and When Will Bitcoin Price be Safe From More Downside?

Bitcoin (BTC) price may have recovered after a period of intense volatility in the last 7 days but price still saw downside osciallating at $87,000.

However, the market is still in a state of uncertainty, especially as economic conditions, fuel skepticism about its ability to recover in the short term.

Bitcoin had a $87,246 press time price indicating bearish pressure. This underscores slight improvements as far as market sentiment is concerned and this was perfectly captured in the Fear and Greed index.

Market sentiment dipped as low as 10 a week ago but it has since recovered to 25 at the time of observation. However, it was still in extreme fear territory, indicating that it may not be out of the woods yet.

Bitcoin Price May Feel Stock Market Woes

Although in last 2 day Bitcoin price achieved some recovery above $90,000, the threat of more potential downside could push prices lower.

A major potential reason why investors are still fearful is the fact that the stock market has recently been in turmoil as prices crashed.

So, why would the crypto market be worried about the stock market crashing? Bitcoin has demonstrated significant correlation with the S&P500 over the last few years. It remains to be the case as per recent observations.

The S&P500 (pink line) fell from 6,144 on 19 February and has since dipped to 5,722 as of March 6th. The rising concerns about pesky inflation and a potential recession have forced investors to take on a cautious approach.

Those concerns extend to Bitcoin price on account of the correlation with the stock market. This suggests that appetite for cryptocurrencies could remain subdued at least until the bearish sentiment cools down.

BTC Price’s Long Term Prospects Remain Bullish

While BTC’s short term prospects appear shrouded in uncertainty, things may be a bit clearer as far as long term prospects are concerned.

The recent dip attracted a significant amount of accumulation, confirming that investors have been taking advantage by buying at lower prices.

IntoTheBlock data recently revealed that roughly $900 Million worth of BTC was moved from exchanges in the last 7 days. A sign that there is optimism that sell pressure may not push BTC much lower.

A possible reason for the optimism about Bitcoin’s limited downside is the fact that multiple countries are slated to start buying Bitcoin soon. This includes the U.S as it aims to build a robust crypto reserve.

Numerous other countries are on track to follow a similar path. The list continues to grow with every passing week.

This week Brazil just confirmed a 10% cash allocation for purchasing Bitcoin courtesy of the newly approved treasury strategy.

Based on the polarizing market events, investors should anticipate short term volatility. Bitcoin price may take a while before getting back to extreme greed territory if market events and outcomes perpetuate uncertainty.