Until Friday, when a crucial resistance level was rejected, the price of bitcoin fell more than 6% for the week.
Risk assets, including Bitcoin, were hit hard by the escalating tensions between Israel and Iran.
Up until Thursday, $288.4 million had left US spot Bitcoin ETFs, suggesting a decline in demand from institutions.
The price of Bitcoin (BTC) fell more than 6% this week ending on Friday, with the escalation of the tension between Israel and Iran adding fuel to the fire. This week, institutional investors pulled about $280 million out of exchange-traded funds (ETFs), adding to the slide. Bitcoin prices might fall much further, even reaching $55,000, according to some experts who are predicting that international disputes would only get worse. But looking at it from a technical perspective, bulls seem to be firmly holding at a key support level.
To what end did Bitcoin fall this week?
Monday was a rejection for Bitcoin, which had ended last week on a positive note. Reduced investment in Bitcoin Spot ETFs in the United States may explain the 3.5% decline in BTC.
The news of Iran's missile launches toward Israel sent Bitcoin down by more than four percent on Tuesday. In reaction to Israel's string of airstrikes on Lebanon over the previous few weeks, this strike was carried out. Data from CoinGlass shows that over $500 million in overall liquidations and over $140 million in BTC specifically occurred as a consequence of the wave of liquidations caused by Bitcoin's price decrease.
According to a prediction by crypto asset trading company QCP Capital, Bitcoin prices might drop even lower, to $55,000, if the geopolitical problems in the region intensify.
Additionally, after eight consecutive days of inflows, the Bitcoin ETF had an outflow of $240.60 million on Tuesday, the worst single-day decline since September 3.
Bitcoin attempted to rebound from the steep sell-off but failed, resulting in a little drop on Wednesday. But $52.90 million still went out, according to the ETF numbers.
According to BlackRock's analysis of Bitcoin's past performance during times of international tension, the cryptocurrency exhibits short-term behavior consistent with conventional risk assets. Over the long run, nevertheless, the numbers reveal that Bitcoin has been more resilient than Gold.
As can be seen from the table below, Bitcoin's returns over the last 10 and 60 days have outperformed both Gold and the US S&P 500 equities index in the face of significant geopolitical events.
The sell-off momentum waned a little on Thursday. Even though the ETF had an outflow of $54.20 million, Bitcoin's price fluctuated, suggesting a lack of demand from institutions. It is aiming to stabilise around the $60,000 level on Friday.
The future of Bitcoin's technology
Bitcoin, the largest cryptocurrency by market capitalization, encountered resistance after testing the falling trendline on its weekly chart, resulting in a decline of more than 6% up to Friday. This comes after three consecutive weeks of rallying in September.
An important resistance zone, this declining trendline (created by joining several weekly closes since March's end) nearly corresponds with the weekly resistance level of about $65,800. If Bitcoin's price keeps falling, it can hit $55,400, the next weekly support level, which is really close to its 50-weekly Exponential Moving Average at $55,336.
Traders seem to be unable to make up their minds as the Relative Strength Index (RSI), a momentum indicator, remains stuck around its neutral level of 50. Once the relative strength index (RSI) falls below its neutral level, the current downward trend may be sustained.
The daily chart, on the other hand, shows a cooling trend after the recent sell-off. About $59,904, the 200-day exponential moving average, BTC found support on Wednesday. On Friday, it was trading for more than $61,500.
Bitcoin may go back up to $62,000, the level of its 61.8% Fibonacci retracement, if this support stays. If we can close above it, we can see the increase go all the way to $66,000. The Relative Strength Index (RSI) technical indicator is aiming to close above 50 after rising modestly on Friday. Assuming the RSI remains above this neutral level, Bitcoin might make a comeback.