Bitcoin Faces Macro Headwinds and Fresh Risks. What’s Next?

BTC tests $65K support as RSI nears oversold territory

Bitcoin continued to drop throughout the week, weighed down by macroeconomic uncertainty and concerns regarding a conflict between the U.S. and Iran.

On Wednesday, the FOMC minutes showed that the Federal Reserve is adopting a hawkish stance and is not in any rush to cut rates. Last week’s CPI showed that inflation retreated from 2.7% to 2.4%, but most FOMC members did not see this as a reason to cut.

According to most of them, the current rate is close to neutral. However, some members agreed that a rate cut is on the table if inflation continues to slow down. At the time of writing, the probability of a 25-bps rate cut in June is 50.4%, little changed from a week ago, when it was 48.9%, according to the CME FedWatch tool.

Talks between the U.S. and Iran did not accomplish much, and some voices claimed that the two countries may be on the brink of military conflict. This would hurt Bitcoin even more because it would trigger a flight to safety, with increased appeal of safe-haven assets.

The list of risks doesn’t stop here, as a newer threat has emerged: quantum computers and the lost Bitcoin. Since Bitcoin’s inception, between 3.5 million and 4 million coins have been lost due to various reasons. Access to these wallets may be restored with the help of quantum computers.

If these coins are recovered, it would create a supply overdose, which would bring the price down because Bitcoin’s scarcity is what adds to its value. At this time, the threat of quantum computers is probably a long way down the road, but nothing is surprising anymore; just look at the speed of AI advancements.

Chart Analysis – BTC/USD

After it failed to continue its brief rebound, Bitcoin started to move sideways, and it seems it is still in indecision mode. We have minor support at $65K, which, if broken, will probably send BTC into the $60K area. That area corresponds to the low created at the beginning of February, and the lower Bollinger band is also close by.

The RSI is very close to oversold territory, hovering around 32. If it drops below 30, this would be a strong bullish signal, because the indicator has not entered oversold twice in rapid succession in a very long time.

For a rally to take place, Bitcoin must first clear the $70K – $71K area, which rejected the price twice recently. If this area turns into support, then we might see further upside, but for that, it will need a catalyst, such as good news regarding the Clarity Act.