Bitcoin Just Flashed This Rare Signal – Here’s What Happened Last Time 

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Arslan Butt

Crypto Writer

Arslan Butt

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Arslan Butt is an experienced webinar speaker, market analyst, and content writer specializing in crypto, forex, and commodities. He provides expert insights, trading strategies, and in-depth analysis...

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March 5, 2025 00:23 EST

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Bitcoin (BTC) is showing signs of extreme volatility, with prices plunging over 9% in the past 24 hours, currently trading at $86,900 after rebounding from an intra-day low of $81,500. The cryptocurrency initially surged to $95,000, fueled by speculation over Trump’s “Crypto Strategic Reserve”, but quickly reversed as selling pressure intensified.

Market sentiment has turned highly uncertain, with the Fear and Greed Index falling to 15, indicating “Extreme Fear” among investors. However, some analysts see a potential recovery, citing rare technical signals that have historically preceded major rallies.

Bitcoin’s Open Interest Hits Six-Month Low – A Bullish Setup?

Despite its sharp decline, Bitcoin’s open interest has dropped to a six-month low, a level last seen when BTC was trading between $50,000 and $60,000 before its surge toward $100,000.

Crypto analyst CrediBULL Crypto points out that this pattern previously signaled market bottoms, suggesting Bitcoin could be poised for a comeback.

• Bitcoin’s funding rate has turned negative, an indicator that often precedes strong upward moves.
• Relative Strength Index (RSI) has dropped to 24, an oversold condition historically linked to price rebounds.
• Global liquidity is rising, and Bitcoin remains undervalued relative to macroeconomic conditions.

However, analysts caution that Bitcoin must reclaim key resistance levels to confirm a bullish reversal. BTC needs to break above $93,000 with strength for the uptrend to resume, while $94,900 remains a critical level for further momentum.

Bitcoin’s Volatility Fueled by Trump’s Crypto Plan and Market Uncertainty

Bitcoin’s recent surge to $95,000 was initially driven by Trump’s unexpected announcement of a “Crypto Strategic Reserve”, which aims to hold major digital assets like XRP, Solana, and Cardano. The initial omission of Bitcoin and Ethereum sparked confusion, but Trump later confirmed their inclusion, briefly boosting BTC’s price.

However, Bitcoin’s gains were short-lived due to a combination of profit-taking and macroeconomic uncertainty. Trump’s 25% tariffs on Canada, Mexico, and China triggered a broader risk-off move, weighing on both traditional and crypto markets. BTC plunged to $82,880 before finding support and rebounding.

• Bitcoin surged to $95,000 after Trump’s “Crypto Strategic Reserve” proposal.
• BTC dropped 9% to $82,880 amid heavy selling and macroeconomic concerns.
• Market decline followed Trump’s tariff announcement, adding to uncertainty.

Bitcoin’s Technical Outlook – Key Levels to Watch

Bitcoin is currently testing a major resistance zone at $86,900, with the 50-period EMA at $87,000 acting as a dynamic barrier. A successful breakout above $87,000 could lead BTC to $90,200, followed by stronger resistance at $94,900.

On the downside, failure to hold $86,900 could result in a retest of $81,500, with further downside risk extending to $78,300. The recent break below the ascending trendline suggests a bearish shift in momentum, increasing the likelihood of extended losses unless BTC reclaims key resistance levels.

With volatility remaining high, traders should closely watch price action around $87,000. A decisive move in either direction will likely dictate Bitcoin’s next phase, setting the stage for either a recovery or deeper correction.

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