For five days straight, bitcoin, Ethereum, and other major cryptocurrencies in the global market have not recorded losses, maintaining momentum. The cryptocurrency market is continuing its move towards the $300 billion region, after dipping below $243 billion last week.
Since March 31, the cryptocurrency market has been able to lead a short-term recovery, bouncing back from the $6,500 region. But, yesterday, CCN.com reported that bitcoin will experience a slight decline in value from the $7,400 mark before it leads another strong rally.
Over the past 24 hours, bitcoin has declined by more than $400 from $7,500 to $7,100. At one point, the price of bitcoin dipped below $7,000, but recovered to $7,100 since then.
The Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, is currently at 37.1, which signifies a neutral zone for bitcoin. If the RSI of bitcoin continues to decline to 30, it would mean that traders have oversold the cryptocurrency. Other momentum indicators such as moving average convergence divergence (MACD) also show a neutral zone for bitcoin, and a lack of momentum for a strong short-term performance.
Given that momentum indicators point toward a neutral zone for bitcoin and moving averages indicate a strong sell signal, it is likely that bitcoin could dip below the $7,000 mark once again before it continues its mid-term recovery.
While technical analysis and momentum indicators point toward a weak short-term trend for bitcoin, fundamentals remain significantly strong. Earlier this week, Augur co-founder Jeremy Gardner stated that the demand towards bitcoin from investors in the over-the-counter (OTC) has spiked substantially over the past few months, as the price of bitcoin rapidly declined.
Low prices of cryptocurrencies are starting to appeal to retail traders and large-scale investors, which could potentially lead to multi-billion dollar bids. In bitcoin, over-the-counter (OTC) markets often refer to direct miner-to-investor trades or brokerage-to-investor trades, or generally traders which are processed outside of the global cryptocurrency exchange market.
“OTC market demand for bitcoin right now is unlike anything I’ve ever witnessed. Several asks for multi-billion dollar bids.”
It is entirely likely that hedge funds and large-scale investors are seeking for opportunities to invest in the cryptocurrency market when most major cryptocurrencies are still significantly down from their all-time high values.
The minor drop in the price of bitcoin and other major cryptocurrencies led to a slight decline in the valuation of the cryptocurrency market, and investors would not have to worry about another correction emerging in the short-term unless bitcoin drops back to the $6,000 region, which seems likely unlikely that this stage.
In consideration of the increasing demand towards bitcoin from over-the-counter markets, large-scale investors, and hedge funds, and the hesitancy of traders to sell the most dominant cryptocurrency at current levels, it is likely that the price of bitcoin will rebound in the upcoming days.
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Last modified: March 4, 2021 5:06 PM