Bitcoin Recovery Flustered by Tesla’s 75% Sell-Off

BTC/USD at Technical Crossroad. Major Hurdles Ahead!

In last week’s post, we talked about the three higher lows printed by BTC/USD and the bullish implications of this pattern. It turns out this was a reliable sign of what followed: Bitcoin climbed to $24,280, moving briefly above the 50-day Moving Average and touching a long-term bearish trend line.

This may be the turning point that the bulls have been waiting for and could signify that a true bottom is in place. However, the trend line is not broken and the pair is hovering right on the Moving Average. This shows that we could be dealing with a bounce rather than a break, which would indicate that the recent move up was just a relief rally based on the overextension of the downtrend. If this scenario is true, then we should expect another drop towards the support at $20,000.

There’s an interesting piece of information that looks very bearish at first but upon a closer look, it may indicate BTC strength: Tesla sold 75% of its Bitcoin holdings. The reason cited by the company is the need for cash inflows due to supply chain troubles generated by the lockdown in China.

Last year, Tesla stopped accepting Bitcoin as payment for their electric cars due to environmental concerns. This triggered bearish pressure and Bitcoin’s price fell. At the time, CEO Elon Musk said that “Tesla will not be selling any Bitcoin”. A year later, that promise is broken.

When Tesla started accepting Bitcoin as payment, Bitcoin went up. Each time Tesla made a Bitcoin-related move or Musk tweeted anything related to Bitcoin, the market reacted strongly. But this time it’s more than a tweet, it is a major decision involving 75% of Tesla’s BTC holdings… and look at Bitcoin – it merely paused its climb. Does this suggest there’s underlying bullish strength? If Tesla would have sold this amount last year the reaction would have been bigger, and Bitcoin’s price would have dropped sharper.

Technical Analysis – BTC/USD

At the time of writing, Bitcoin is changing hands at $23,100, coming off weekly highs at $24,280. It is up 11.30% over the last 7 days and 0.68% over the last 24 hours. After two very bullish days earlier in the week, the price stalled and printed a few indecision candles (long wicks, small bodies).

This slowing down can be attributed to the Tesla sell-off mentioned earlier but also to the fact that the pair reached the 50-day Moving Average and the long-term bearish trend line seen on the chart below.

The confluence zone created by the MA and the trend line will influence the next medium-term direction. A break will solidify the idea that BTC has finally found a bottom and will make $25K the immediate destination, while a bounce lower will probably take BTC/USD into the $20K territory.