Over the past 12 hours, the Bitcoin price has recovered from $3,700 to $4,000 on major fiat-to-crypto exchanges like Coinbase and Bitstamp.
On December 3, Bitcoin (BTC) was on the verge of dipping below a major support level at $4,000 and at the time, several analysts said that a drop below the support level could result in BTC dropping to mid-$3,000.
The unexpected swift recovery of BTC has allowed the dominant cryptocurrency to avoid what potentially could have been a large drop to the lower range of $3,300 to $3,600.
Prior to the abrupt recovery of Bitcoin to $4,000, technical analysts said that the momentum of the asset was severely weak at $3,800.
“I don’t see any reason to be bullish on BTC at this level. Not that this won’t pump to test resistance $3,930 or higher, but longing here is a gamble I’m not interested in,” The Crypto Dog said on Monday.
Hsaka, a cryptocurrency trader, echoed the general sentiment of the market and said:
“Dump, consolidation, dump. One of the most frequently occurring patterns on the corn, generally has three legs to it. Targeting the next blue level on a clean break of the swing low.”
Technical indicators demonstrated a large fall in price was in play but instead, the price of the BTC experienced an unpredictable recovery.
While a proper trend reversal could occur in the short-term, given the relatively low volume of Bitcoin at $5.3 billion and the generally negative sentiment in the market, a major upward movement to the $5,000 remains highly unlikely.
“Will be interesting to see where this goes, it could be a legitimate reversal. I remain net short until we start breaking through $4,000. Leaving my long hedge at break even stop, no set targets yet. If we start pumping to 5k (without stopping me out first) I’ll ride it out,” the analyst said.
Although Bitcoin has been able to rebound from its minor fall on December 3, other major cryptocurrencies including Bitcoin Cash (BCH) have struggled to maintain any sort of momentum in a low price range.
Throughout the past 24 hours, BCH has declined by more than seven percent, dropping from $200 to $154 within a seven-day span, by nearly 30 percent.
Initial coin offering (ICO) projects are downsizing massively with Steem laying off 70 percent of its workforce and even ConsenSys, the largest blockchain software firm with more than 1,000 employees, is planning to tidy up the business in the weeks to come.
Miners, with the breakeven cost of Bitcoin mining approaching $3,000, is also having trouble maintaining their businesses by mining at a loss.
Historically, a point in which businesses, miners, and projects begin to downsize and suffer financially was when the market reached closer to a bottom and initiate an accumulation phase. As companies start to struggle and the price of major cryptocurrencies stabilize in a low price range, the market could demonstrate signs of exhaustion and a bottom.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:13 PM