During the past week, Bitcoin has been struggling to reassert its $7K position due to the lack of a stronger bullish force that would have pushed its price upwards. Just like last week, trading signals remain split while the price is moving around the same levels, reaching short of $7,000 at the time of writing.
Once again, influential media portals are buzzing about the burst of another bubble after Bitcoin failed to regain last year’s high price point during the first quarter of 2018. According to Bloomberg, the latest price swings could be due to a lack of liquidity in the Bitcoin market that makes the price prone to ups and downs even when a relatively small number of traders decide to buy or sell at the same time.
Another viable reason is the difficulty of short-selling Bitcoin, which made the cryptocurrency more vulnerable to various levels of pessimism and optimism that lead even rational traders to push its price over its “fundamental value”. Whatever the case, Bloomberg suggests that the trend might continue in the future and cause another bubble (rapid price push) that may or may not be bigger than the one we saw in December.
Buyers Stepping In
After climbing over $7,000 at the start of last week, Bitcoin began to roll back due to a generally bearish market. The lowest price point during the past week was reached on Friday afternoon when Bitcoin briefly touched $6,575.00, while the highest USD value was reached on Monday morning when Bitcoin hit a price of $7,160.17.
Bitcoin’s market capitalization also took a cut during last week, dropping down from $125.4 billion to the current $116.3 billion. Unlike a month ago, the trading volume remained relatively low during last week, showing less interest in BTC trading. It currently sits at $4.2 billion.
Our technical analysis indicates that buyers are returning on the scene, with short-term signals showing that 3 out of 12 oscillators and 8 out of 12 moving averages are pro-buy. However, as the SMA 100 is still below the SMA 200, there is less resistance to be found on the downward course, while Stochastic and RSI are at a neutral ground, indicating neither side has a better pull.
With the current stance, it will be up to a stronger change in either direction to move the price from its consolidation triangle and towards a different price range. If bullish pressure persists, we could see a push beyond the $7,000 resistance level.
Interest in Bitcoin Called an “Infection”
One of the most talked about news updates from this week was a report on Bitcoin’s infectious nature. As the Guardian reports, a group of analysts from Barclays have ascribed Bitcoin’s price rallies to an “infection” with new buyers which helped the cryptocurrency see a 900% increase near the end of last year.
Speaking in medical terms in a Tuesday note to their clients, analysts from the bank talked about how Bitcoin’s price grows when the Bitcoin “infection” is spreading from one buyer to the next, most commonly via word-of-mouth. Boosted by FOMO (fear of missing out), this so-called “infection” grows and drives new investors until people start losing money and “immunity” starts to kick in.
According to the same analysts, an “immunity threshold” has now been reached, i.e. an adequate portion of the global population has become “immune” to the Bitcoin bug, stopping the spread of “secondary infections”. Thus, the report concludes that last year’s Christmas prices (when Bitcoin hit $20,000) are likely to be the “ultimate price” the cryptocurrency could reach.