Bitcoin’s (BTC) rapid recovery from sub-$50,000 prices last Monday has restored bullish sentiment in the crypto market, fueling calls for a rally to $90,000 and higher.
However, one analyst predicts a short-term pullback, with the price possibly dropping $5,000 from current levels of around $58,500.
“Bitcoin is more likely to drop $5K than gain the same amount,” Alex Kuptsikevich, senior market analyst at FxPro, said in an email to CoinDesk.
Kuptsikevich’s bearish view stems from Bitcoin’s inability to sustain gains above $60,000 following a “Death Cross,” a bearish sign when the 50-day simple moving average (SMA) crosses below the 200-day SMA.
“Bitcoin failed to break above $60K and faced selling pressure after attempting to break above the 50- and 200-day MAs late last week, indicating seller dominance,” Kuptsikevich noted.
He also added that the 14-day relative strength index (RSI) is no longer showing oversold conditions, which means another drop is possible, in line with the recent dominance of sellers above $60,000.
The 14-day RSI is a momentum oscillator that measures the speed and change of price movements. The RSI below 30, observed after last Monday's crash, indicates oversold conditions, which typically precedes a pause in a downtrend and a price recovery.
“The RSI on the daily timeframe has exited the oversold zone, losing momentum for further growth,” Kuptsikevich said, explaining his bearish view.
The possibility of short-term BTC price weakness could increase if the US consumer price index data for July, due for release on Wednesday, shows high inflation, dampening hopes of a Fed rate cut in the coming months.
Bitcoin bounced above $60,000 late last week, recovering more than 50% from a five-day slump through Aug. 5. The recovery has since stalled as crypto-friendly Republican candidate Donald Trump gave way to rival Kamala Harris in prediction markets surrounding the expected Nov. 4 U.S. election results.
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