Overnight, the bitcoin price recovered beyond $10,000, achieving $10,172 at the day’s highest point against the U.S. dollar.
Technical analysts have said that bears and sellers in the market may be losing momentum as bitcoin nears its monthly support.
“Sell off has been losing momentum. BTC on monthly support. Bears are on a timer. The longer this takes, the worse it gets for them,” one trader said.
Since June, the “Real 10” volume of bitcoin has dropped by more than half to $1 billion, which may indicate a decline in sell pressure as well as overall trading activity in the global market.
Throughout the past week, bitcoin has shown signs of uncertainty as bulls have attempted to counter sell pressure that has been placed upon the market since the first large pullback of bitcoin at $14,000.
With sell pressure dropping, there are hopes that bitcoin would initiate a short term trend reversal and rebound above key resistance levels around $11,000.
However, as seen in the minor correction of gold, some analysts warn that the Federal Reserve, which just lowered its interest rate target for the first time since 2008, will not initiate any more rate reductions this year. If there’s any correlation between Fed policy and the crypto market, that could lead investors to sell liquid holdings like bitcoin in the near term.
Chris Burniske, general partner at Placeholder VC, stated that in December 2018, the bitcoin price likely fell to $3,150 at the year’s lowest point due to the decline in the appetite of investors to hold high-risk investments amid heightened geopolitical tension.
He said at the time:
“But following the December 2018 global macro scare, central banks (including the US Fed) got dovish, injecting liquidity and assurance back into the markets. And so risk-appetite has increased, including for BTC. Furthermore, the US’s trade war with China, China’s tightening of capital controls to limit funds fleeing the country, and a weakening yuan all added fuel to BTC’s fire.”
Strategists have said following the official rate cut by the Federal Reserve that most investors expected three or more cuts in the short term and reacted negatively when the Federal Reserve suggested that its 25-basis point cut might be a one-and-done action, not the first step in an aggressive easing cycle.
There are concerns that like in 2018, bitcoin could face sell pressure if the U.S. stock market retraces further than the expectations of investors.
“The market pricing is for three more cuts for the next one year. He is pushing back that market pricing. He says this is a mid-cycle rate cut, which means it is one-two cuts and done…he is not giving the market what it wants – three cuts for next year. He basically said ‘At the beginning of the year, we were pricing a few hikes and turned patient – no rate hike, no cut – and now we’re cutting 25 bps. We think that’s accommodative enough.’ he didn’t say they need to cut more. That’s a big surprise to me and the market,” Zhiwei Ren, Penn Mutual Asset Management portfolio manager, told Bloomberg.
Still, traders remain neutral on the short term trend of the dominant cryptocurrency. While sell pressure has declined, the lack of volume in the market presents room for another trend reversal.
Click here for a real-time bitcoin price chart.
Last modified: June 23, 2020 2:39 PM UTC