The bearish trend we observed during our update last week seems to have intensified over the weekend, triggering another price decline for Bitcoin. At the start of the week, the cryptocurrency fell down further from its previous price range pushed by a higher trading volume than usual. Yet, current market signals hint that the coin may be headed for a recovery as most indicators have turned bullish.
As observed by Fortune on Monday, Bitcoin fell to a six-week low, dropping down below $3,400 at a value it hasn’t touched since December 17th. Understandably, along with Bitcoin fell 9 out of 10 leading cryptocurrencies by market capitalization, most of which drew similar trend lines on their respective price charts. According to three analysts who spoke to the magazine, Bitcoin’s price declines aren’t a cause for any major concerns as they are the “usual gyrations” of a market that’s trading within a specific range.
However, according to CryptoPatterns publisher Jon Pearlstone, who spoke to Forbes, the latest price movements could also be a sign that Bitcoin is heading on a more volatile course. As Pearlstone explains, if the price doesn’t recover and breaks downwards from the current range, it could establish a new, much lower technical support, one we haven’t seen since 2017.
Price Headed for Recovery?
Since our previous update last Wednesday, Bitcoin’s USD price fell down by over $200 as sellers began dominating the scene. The highest Bitcoin climbed during this period was on Saturday morning when the cryptocurrency reached a value of $3,653.42 while the lowest price was touched on Tuesday morning when Bitcoin briefly traded for $3,400.82 per coin.
Observing the market statistics, it’s evident that the price drop was brought on by an increase in 24-hour trading volume, which jumped upwards to $6.8 billion as Bitcoin hit its weekly low. However, since early morning, the trading volume has been on a decline, currently sitting at $5.6 billion. The market cap is also down, now at $60.5 billion.
Our technical analysis indicates that the market is pro-buy, with 9 out of 12 technical oscillators and 6 out of 12 moving averages being in the green, sending a “buy” signal. The MACD is already in the bullish zone and short-term charts mirror a similar trend, being predominantly bullish. If the buying momentum continues, we may see a new support level form around $4,500. On the other hand, if trends reverse, we will be looking at more losses.
Bitcoin – Not Really the Next Gold
In the past two years, there has been much talking about Bitcoin’s ability to replace gold as a haven asset. However, according to a new World Gold Council report, the world’s most dominant cryptocurrency failed to established itself as a new form of gold even though it had the chances to do so, Market Watch reports.
By observing the performance of Bitcoin during the fourth quarter of 2018 – a period when stock markets across the globe suffered their worst three months – Bitcoin behaved more like a risky asset and a tech stock rather than a safe haven, while gold actually rallied. In that period, Bitcoin’s performance fell down by 55% while the Nasdaq Composite Index (Nasdaq, COMP) also fell 19%. At the same time, Gold rose by 9.4%. Moreover, BTSUD, +0.32% correlated heavily with the Nasdaq at 0.69.
Although this is just one data point, analysts at the Council stress the importance of the quarter observed, which was one of only a few periods since the financial crisis during which the market saw true stress.