- Bitcoin price has pulled back after the spectacular rally in July.
- The fear and greed index has dropped to 31 recently.
Bitcoin price has made a strong pullback in the past few days as the recent recovery has derailed. The BTC/GBP price dropped to 18,707, which was the lowest level since July 27th. In the same period, the BTC/USD pair dropped to 22,850, 7% below the highest point in July. The Bitcoin fear and greed index has fallen to 31.
Why is BTC retreating?
Bitcoin price staged a strong comeback in July as investors bought the dip. At the time, the coin’s price managed to move from the year-to-date low of $17,600 to a high of $24,643. A closer look shows that this performance mirrored what happened in 2021 after the strong crypto crash.
The recent rally was mostly triggered by the strong performance of Ethereum. Ether skyrocketed from about $800 to over $1,700. Investors were cheering the upcoming merge event that will combine the current PoW version with the Beacon Chain.
Bitcoin price rose in line with that of American stocks. Key indices like the Nasdaq 100, Dow Jones, and the Russell 2000 rallied as investors bought the dip. The three had the best performance since 2020. In the past few months, BTC and American indices have had a strong correlation.
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Meanwhile, the BTC/USD and BTC/GBP prices rallied as investors became less fearful about the market. The Bitcoin fear and greed index moved from the extreme point of 11 to 31. On the other hand, the CNN Money fear and greed index moved from 24 to 39.
The recent retreat has happened at a time when the US dollar index (DXY) has moved from last month’s high of $109 to $105. Historically, Bitcoin has an inverse relationship with the US dollar. Further, the decline coincides with the overall drop of American shares.
Bitcoin price prediction
The four-hour chart shows that Bitcoin has been in a strong bearish trend in the past few days. This price has managed to move below the upper side of the ascending channel shown in red. Along the way, the pair has managed to move below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved below the neutral point at 50.
Therefore, the coin will likely continue falling as sellers target the next key support level at $21,400. However, in the near term, the coin will likely resume the bullish trend in August.
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