Bitcoin Faces Increased Downside Volatility as Investors React to Trump's Bitcoin Reserve Plan

Bitcoin may experience increased downside volatility if it ends the week below the critical $82,000 support level, as investor sentiment remains subdued following disappointment in the US Strategic Bitcoin Reserve. President Donald Trump's executive order on March 7 outlined a plan to establish a Bitcoin reserve using cryptocurrency forfeited in government criminal cases rather than actively acquiring Bitcoin through market purchases. The lack of direct federal Bitcoin investment has resulted in a negative market reaction and a decline in Bitcoin's price, according to Bitfinex analysts. To avoid further decline due to short-term investor disappointment, Bitcoin must close the week above the key $82,000 support level. This lack of direct federal Bitcoin investment has tempered expectations of strong institutional support and potential price increases. The sensitivity of cryptocurrency markets to government actions and policies is evident in this situation. Bitcoin has been trading below the $90,000 psychological mark since the first White House Crypto Summit on March 7. Closing the week above the key $82,000 support level may indicate a shift in Bitcoin sentiment as investors analyze the details of Trump's Bitcoin reserve proposal. Bitcoin's price continues to be influenced by macroeconomic factors and global trade concerns, according to Iliya Kalchev, dispatch analyst at digital asset investment platform Nexo. Short-term movements in Bitcoin's price will be heavily influenced by macroeconomic factors, with key US economic events next week likely to impact the market. A weekly close below $82,000 could introduce significant volatility to the crypto markets. A potential Bitcoin correction below this level could trigger over $1.13 billion worth of cumulative leveraged long liquidations across all exchanges, according to CoinGlass data. On a positive note, Bitcoin may be approaching its local bottom based on the relative strength index (RSI), which indicates whether an asset is oversold or overbought. Bitcoin's RSI stood at 28 on the daily chart, suggesting that the asset is oversold. Each time Bitcoin's RSI reached 28 during this current cycle, the price either bottomed out or was close to a bottom, according to popular crypto analyst Rekt Capital.