- The price of BTC fell to $27,400 after the sale of BTC holdings by the US government.
- Price charts suggest that the current price could be a good buying opportunity.
From Bitcoin [BTC] the price soared after the release of the Consumer Price Index (CPI) report from the Bureau of Labor Statistics on May 10, which showed that annual inflation fell to 4.9% in April from 5% in March and less than the expected 5%. However, the gains were short-lived as news spread that the US government had divested its Bitcoin holdings, causing the cryptocurrency to rapidly lose value.
The US government just sold 9.8k of it #Bitcoin worth $277 million, causing prices to plummet.
They still own over 200,000 $BTC — if they decided to sell that, prices would be back below $10,000 in a heartbeat. pic.twitter.com/9dnRp5c7S0
— WhaleWire (@WhaleWire) May 10, 2023
Read Bitcoin [BTC] Price Forecast 2023-24
This sell-off led to widespread FUD in the market, leading words like “sell” and “bearish” to emerge as popular words about Santiment’s social trends.
However, according to the on-chain data provider, when these words appear after the price of a crypto asset tumbles, good buying opportunities arise and can lead to a price increase.
#crypto traders were selling in panic today #Bitcoin dropped to $27.1K hours ago. But prices have shown signs of recovery. Time and time again we see prices rise when #FUD words like #to sell & #bearish to appear. These moments are generally good buying opportunities. https://t.co/VUGfTICuff pic.twitter.com/ZymmDQV09z
— Santiment (@santimentfeed) May 10, 2023
To buy or not to buy?
According to data from CoinMarketCap, BTC traded at $27,403.54 at the time of writing. While the price was down 1% in the last 24 hours, trading volume was up 56%.
This divergence between price and trading volume showed that there was more market activity. Despite the drop in prices, more transactions were made.
However, new demand may be needed to bring in the liquidity needed to initiate a price correction to the upside. Without it, the price of BTC could continue to fall.
An assessment of BTC’s price movements on a daily chart revealed that coin distribution was greater than accumulation.
At the time of writing, BTC sellers controlled the market as the negative direction indicator (red) of the coin’s direction movement index (DMI) rested above the positive direction indicator (green).
Also, BTC’s main momentum indicators were in downward trending positions below their respective neutral zones at the time of writing. For example, the Relative Strength Index (RSI) was 41.34, while the Money Flow Index (MFI) was 47.33.
While coin distribution increased significantly, two prominent indicators pointed to a potential buying opportunity.
First, a look at BTC’s Bollinger Bands showed that the price of the leading coin hit the lower band of the indicators. Whenever this happens to an asset, it often indicates that while the price may be trading low, it may be a good time to buy.
A difference was also noticed between the price of BTC and its Chaikin Money Flow (CMF) indicator. The CMF was in an uptrend at 0.05 at the time of writing, while the price of BTC moved south.
In general, when an asset’s CMF diverges from a higher low and begins to rise, a buy signal is generated if the price action creates a lower low in oversold zones. Therefore, this could be a good time to monkey the coin.
Source: BTC/USDT on TradingView
