The crypto market is holding its breath as Bitcoin (BTC) faces a mix of recovery and uncertainty. A recent analysis by Swissblock Technologies highlights a worrying development: Bitcoin’s risk index has risen sharply, indicating potential volatility in the near future. What does this mean for the world’s largest cryptocurrency, and what should investors watch out for?
According to Swissblock, the risk index for Bitcoin, which has been at a relatively stable level since October, is now in ’emergency mode’. With a current level of 79.44, the index has surpassed the peaks of August – when the yen carry trade caused quite a stir. The level is now approaching the values of September, when BTC corrected to $53,000. “The risk has increased enormously,” Swissblock reported on X, and this is not an empty warning. If the index hits 100, they believe it could mark the bottom of this correction and herald a recovery. Until then? Patience is the key, as the market remains unpredictable.
The Bitcoin price showed a volatile pattern this week. After four consecutive days of declines – the heaviest series since August – the price dropped by 8% at one point on Friday to $78,167. This brought BTC about 30% below its peak six weeks ago. However, the coin managed to recover: in the past 24 hours, Bitcoin has risen by 5.73% to $84,633, after a peak of $86,534 on Saturday. Despite this recovery, February has been a tough month, with a decline of nearly 18% – the largest monthly drop since June 2022.
The broader sentiment is also reflected in the US Bitcoin ETFs. The investment products saw a record outflow of $3.6 billion, the largest outflow since the funds started. This underlines how pessimistic the market is currently about risky assets such as crypto.
The recent dip temporarily brought Bitcoin below the 200-day moving average (DMA) of $82,117, a crucial level for the long-term trend. It was the first time this happened since October, but the price quickly climbed back above it. A ray of hope is the relative strength index (RSI), which dipped below 30 – a signal that Bitcoin may be oversold. This could mean a rebound in the coming days, although consolidation is more likely as long as there is no clear breakthrough. The next levels to watch? The SMA 50 at $97,697 and the SMA 200 at $82,115. A breakout above or below these points will set the tone for what’s to come.
Swissblock’s analysis paints a picture of a market teetering on the edge. The increased risk index, combined with recent price swings, hints at more volatility. Yet the oversold RSI level offers hope for a breather or even a short rally. For investors, it’s a matter of staying sharp: a spike in the risk index to 100 could be a turning point, but until then, the market remains a roller coaster. With the yen carry trade still fresh in memory and macroeconomic uncertainty looming, it remains to be seen whether Bitcoin can prove its resilience – or if we’re heading for a repeat of September. Keep your eyes open and your strategy sharp!
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