Bitcoin Dips Below $85,000: Analyst Discusses Potential for Bullish Recovery

Recent Market Movements

Over the last 24 hours, both the total cryptocurrency market capitalization and Bitcoin (BTC) experienced notable corrections, erasing the gains made over the weekend. Currently, BTC trades at $84,255, slipping below the $85,000 threshold once again.

Interestingly, a pseudonymous analyst from CryptoQuant known as Banker proposes that this decline might catalyze a new bullish trend. Below, the analysis outlines the key indicators suggesting a possible rebound.

Smart Money Recognizes the Opportunity

In a recent report, Banker highlighted three crucial signals that point towards a potential short-term recovery for Bitcoin, including a significant decrease in open interest.

According to the report, Bitcoin’s Open Interest Change (7D) has seen a sharp decline of -14.42% as of March 1st. Open interest reflects the total number of unsettled derivative contracts, such as futures and options. A decreasing open interest implies a reduction in market leverage, typically providing a window for buyers to enter the market at more favorable prices, potentially driving the price upward.

“A steep drop like this often indicates a reduction in speculative trading, suggesting strong buying opportunities during market dips, as it may signify capitulation or a re-examination of positioning,” stated Banker.

Another signal indicating a potential rebound is the decline in the Crypto Fear and Greed Index, which currently sits at 15, representing extreme fear among traders. This heightened caution among investors leads to increased selling pressure.

Historically, such extreme fear levels are often correlated with depressed market conditions, suggesting traders may find it advantageous to “buy low and sell high.”

“The recent decline indicates a cooling-off period, which could create a more robust market environment going forward,” Banker added.

If BTC traders strategically capitalize on this trend by increasing their accumulation, it could pave the way for a short-term recovery. Furthermore, anticipation surrounding the upcoming Crypto Summit on March 7, organized by White House AI and Crypto Czar David Sacks and led by President Trump, could act as a catalyst for market activity, as discussions are set to address new regulations on digital assets.

“Depending on the discussions and outcomes, there might be an opportunity for upward movement. Investors should, however, proceed with caution while staying vigilant, as the current dip in sentiment and open interest may present advantageous entry points for those with a long-term outlook,” Banker advised.

BTC Approaches Key RSI Level—Rebound or Further Decline?

In addition to on-chain indicators, BTC's nearly oversold Relative Strength Index (RSI) supports Banker’s optimistic perspective. As of now, the RSI is recorded at 36.88, suggesting BTC is approaching oversold territory and may soon experience a price uptick. Should this sentiment hold, Bitcoin could see a retracement rallying towards resistance levels near $92,247.

Conversely, if the downtrend continues, Bitcoin’s price may descend to approximately $80,580, marking a critical point for potential traders to consider their positions.