Bitcoin price surge risks being replaced by updating lows

Bitcoin prices have experienced a sharp increase in volatility over the past few days. The growth impulse of the 2nd of March was replaced yesterday by a collapse of a similar magnitude. The price of the main cryptocurrency failed to consolidate above the 91,000 level, threatening the continuation of the downward movement. Friday's lows, located near the 79,000 level, are once again becoming the target of sellers. The situation looks increasingly dangerous as bitcoin has virtually no support levels down to the 70,000-73,000 range.

The wave of euphoria caused by Donald Trump's initiative to create a strategic cryptocurrency reserve in the U.S. has quickly subsided. In addition to bitcoin, it will include Ethereum, Ripple, Solana and Cardano. Previously, analysts believed that only bitcoin had sufficient qualities to be used as a reserve asset. However, the American president's plan allocates only a limited amount of money for the purchase of the world's main cryptocurrency.

Moreover, the mass purchase of crypto assets by the U.S. authorities may not take place at all. IG Market analyst Tony Sycamore draws attention to the unclear sources from which bitcoin and other cryptocurrencies will be credited to the U.S. reserve. Specifically, U.S. law enforcement agencies have about $18.5 billion worth of confiscated cryptocurrency in their accounts. These assets can be used to replenish the reserve without any purchases on exchanges.

Reuters experts suggest keeping a close eye on the upcoming cryptocurrency summit, which will be held at the White House on March 7. If this event confirms the intention to create a reserve only at the expense of cryptocurrencies already held by the U.S. authorities, their prices risk falling further. Without support from the Fed's monetary policy and economic statistics, it will be difficult for bitcoin to reverse the current situation and return to growth.

The RSI indicator on the daily chart of BTCUSD has managed to unload the oversold condition, and now does not prevent the continuation of the downward movement. The nearest benchmark for the bears is the 79,000 level.

Consider the following trading strategy:

Selling BTCUSD at the current price. Take profit - 79000. Stop loss - 91000.