Bitcoin has struggled to cleanly break out of the $4,000 resistance level and remain above it for more than three months, staying in a tight range between $3,300 to $4,000.
If the dominant cryptocurrency fails to test $4,000 again and slips, traders foresee the Bitcoin price declining to the $3,300 to $3,500 range.
“$4,400-$4,500 area is where I intend to hedge if we go up. If break down, keep an eye for absorption below $3,330 (HTF liquidity pool). The $2,500-$2,850 area is where I start buying spot if no absorption and we break-down to new lows,” a trader said.
But, if the Bitcoin price maintains its momentum at the current level and gradually climbs up to the mid-$4,000 region, analysts project a strong accumulation phase for the asset.
Traders are Cautious About Bitcoin
The valuation of the cryptocurrency market has recovered at a fast pace in recent weeks.
Since February 15, within a month, the cryptocurrency market has added $14 billion, fueled by the unforeseen rally of alternative cryptocurrencies and tokens.
Throughout March, low market cap tokens and cryptocurrencies have recorded massive single day gains in the 50 to 100 percent range, with assets in the likes of Enjin Coin and Groestlecoin surging off of high-profile product launches and strategic partnerships.
However, despite the newly gained momentum of the cryptocurrency market, Bitcoin has shown weak signs of upside price movement after failing to test $4,000 since early March.
According to Bloomberg Intelligence analyst Mike McGlone, technical indicators demonstrate an overall decline in long-term buying demand for Bitcoin, which could hinder the prospect of an accumulation phase in the upcoming months.
“The entire industry is ripe to resume a path to lower prices. Conditions are akin to November, just prior to the collapse. Prices are consolidating within narrowing ranges, with a few sharp bear-market rallies that appear fleeting,” McGlone said.
However, the trend could alter in the near-term depending on the sentiment in the cryptocurrency market and the performance of tokens.
eToro senior market analyst Mati Greenspan said that alternative cryptocurrencies are delivering “spectacular gains” as the market approaches the final leg of the crypto winter.
He emphasized that the performance of Bitcoin has not been poor throughout the past three months, relative to previous extended time frames.
Many traders in the cryptocurrency market are currently observing the price trend of BTC and are not definitively convinced that it is on its path to its 12-month low.
“Still in my short, would cut with a HTF close thru $3,960. If we break the grey block [$3,900] I expect a move towards $4,000+. If we lose $3.800 I would expect a move to the yearly open ($3,693),” a trader known as Mayne said.
Why November-Like Movement is Dangerous
If Bitcoin replicates its movement in November as suggested by McGlone, it could demonstrate a 40 to 50 percent drop following several months of stability and low volatility.
In November, it plunged by half from over $6,000 to $3,122 following just about three months of minimal price movement in the $6,000 to $6,000 range.
Previously, CCN.com reported that an analyst said the Bitcoin price could plummet to as low as $1,000 if it reflects its movement from September to November.
“The longer we stay stuck in this range the more I feel like we will mirror the price action from September 20, 2018 – November 25, 2018,” the analyst said.
While a retest of the yearly low certain remains a possibility depending on the movement of Bitcoin at $4,000, analysts are cautious in projecting the near-term price trend of the asset.
Last modified: March 4, 2021 3:19 PM