Bitcoin could be in the last phase of the bear market but several analysts believe there is still a long way to go before the dominant cryptocurrency recovers to previous levels.
Throughout the past two months, the Bitcoin price has recovered from $3,210 to $3,850 by nearly 20 percent after demonstrating a spike in demand in a low price range.
Many analysts believe Bitcoin is en route to establishing a proper bottom and initiating a gradual increase in price over the long-term.
According to Mike McGlone, an analyst at Bloomberg Intelligence, the asset will most likely endure a longer bear market in the first two quarters of 2019.
Suggesting that the recent recovery of Bitcoin is a short-term bounce before approaching the last phase of the bear market, McGlone said:
The reduction of that selling is a good reason for the bounce. Now is about the duration of the bounce before resuming what is likely a longer-term bear market.
As CCN.com reported on January 5, it is entirely possible for BTC to fall below major support levels if the asset does not break out of key resistance levels above the $4,500 mark.
From November to December, all large crypto assets showed wild volatility in a low price range with no signs of stabilization. Throughout the past three months, the daily volume of cryptocurrencies averaged at around $15 billion, which is fairly low considering that the trading activity of an asset tends to increase in volatile periods.
With the daily volume of cryptocurrencies, especially assets outside of Bitcoin and Ethereum, at yearly lows, a breakout above key resistance levels seems unlikely in the short-term.
Speaking to Bloomberg, eToro senior market analyst Mati Greenspan said that BTC is still closer to the bottom than the top and thus it may see an increase in demand from investors as its low price range appeals to both retail traders and institutional investors.
Usually the best thing to do is to buy low and sell high. So if we are going by technical analysis we can very easily see on the chart that we are much closer to the bottom than we are to the top. I’m seeing an industry that is growing at a very rapid pace right now where we see companies that are involved in Bitcoin and blockchain hiring at a rapid rate. We see new projects coming online. We see all kind of indication that people are getting more and more involved in the market.
If cryptocurrencies begin to engage in a major rally having seen a high volatility rate in the last two quarters of 2018, the asset class will be vulnerable to a large drop in valuation in the upcoming months.
An ideal scenario for cryptocurrencies is to engage in a gradual upward price movement in 2019 and considering the historical performance of Bitcoin, the asset class is expected to see a stable few quarters throughout this year.
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Last modified: June 14, 2020 9:35 AM UTC