On November 28, the price of Bitcoin (BTC) spiked from $3,771 to $4,355, by more than 15.4 percent. In less than 48 hours, the dominant cryptocurrency has fallen back down to $3,861, dropping below the $4,000 mark.
Bitcoin recorded a 7-month high daily spike in value on Wednesday, leading traders to be optimistic about the short-term trend of the asset considering the sheer intensity of the upward movement.
But, the lack of momentum of BTC inevitably led the cryptocurrency to fall by around seven percent in the past 12 hours.
On Wednesday, Hacked.com reported that traders were not convinced of a bull run following Bitcoin’s strong 15 percent rally. At the time, prominent cryptocurrency trader with the alias The Crypto Dog said:
“Very weak. I originally had a bullish mindset watching this PA but the response from bulls has been disappointing. I still think we’ll see a bounce from 4k, but it may not continue much further. Let’s see what happens.”
Alex Kruger, an economist and a cryptocurrency trader, also suggested that while the short-term corrective rally allowed the asset to establish a bottom, it has not found a proper bottom in a price range and that a drop below the $4,000, possibly to $3,700, remains a possibility.
According to cryptocurrency technical analyst Hsaka, when the price of Bitcoin hovered at around $4,300, it was testing a resistance level. Breaking out of it could have allowed the asset to test major resistance levels in the higher range of $4,800 to $5,200, but ultimately, BTC struggled to demonstrate strength at $4,300.
“Don’t go getting euphoric already, price is at resistance on higher time frames. Expecting a pullback to 4060 to begin with. It’s also futs expiry day tomorrow. Bullish on volatility,” Hsaka said, prior to the drop.
Following the seven percent decline in BTC, the trader added:
“I want to see this $4,060 level hold, otherwise think we’re heading down to $3,800s.”
The cryptocurrency market showed massively oversold conditions earlier this week and that led the market to record an impressive and an unforeseen corrective rally. Even tokens, which have been struggling to due to increasing regulatory pressure on ICO projects, rose by more than 20 percent against the U.S. dollar.
The problem was, although oversold conditions led the market to recover, not enough buy volumes sustained the momentum.
Bitcoin already dropped to $3,861 on the daily’s low. Unless a swift recovery to around $4,100 to $4,200 is made in the next 12 to 24 hours, a further drop to the mid-$3,000 level is more likely than a breakout of major resistance levels.
During the weekend, the volume of the cryptocurrency market tends to dip, and that could have a negative impact on the short-term trend of digital assets in general, especially if the volume of Bitcoin drops back down to $4 to $5 billion.
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Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 2:30 PM