On July 18, the bitcoin price experienced an abrupt surge from around $9,300 to $10,500 as the crypto market rebounded, rising by well over $1,000 within minutes, as CCN.com reported.
Following the sudden upside movement, technical analysts still generally remain cautiously bearish towards the short term trend of the dominant crypto asset due to its inability to cleanly break out of a key resistance level at $10,850.
As said by technical analyst Eric Thies, throughout the run up towards the 2017 bull market, the bitcoin price frequently experienced pullbacks in the range of 31 percent to 40 percent against the U.S. dollar.
“Bull run in 2015-2017 included run-ups, typically followed by a retrace to touch the top of the prior high. These drops ranged from 31-40%, before rinsing/repeating onward. Looks very similar to what we are seeing now,” said Thies.
Since hitting its yearly peak at $14,000, the bitcoin price has fallen by 25 percent since then to $10,500 and a 40 percent pullback from the yearly high would place bitcoin at around $8,400.
It is uncertain for bitcoin to recreate its formation in 2017 in the upcoming months, primarily because the structure of the market has transformed significantly over the past two years.
More institutional investors are involved in the crypto sector through regulated investment vehicles like Grayscale’s Bitcoin Investment Trust (GBTC) and the CME bitcoin futures market has started to account for a larger portion of the global bitcoin volume.
However, based on technical indicators, some analysts have suggested that despite yesterday’s upside movement, the foundation of BTC for a new rally is considered to be weak, which may leave the asset vulnerable to a short term trend shift.
One technical analyst who anticipated the recovery of BTC to around $10,400 prior to the upside movement said that the short term trend of BTC could turn bullish if it passes $10,850 as a key resistance level.
“10.4 met. No violent reaction, no rejection – BTC looking decent. Let’s see reaction at this next resistance. Punch and close above $10,850 and things start looking substantially bullish,” the analyst explained.
If it struggles to break out of it, there exists a possibility of the asset retesting support levels below $10,000, some said.
Similarly, technical analyst and trader Josh Rager noted that although bitcoin could reclaim its positive short term trend, it would need to surpass resistance levels near the $11,000 mark.
“Strong move today but the candle closed under both daily resistance and the monthly open (from July 1st) resistance Notice how this area once supported but now flipped resistance This is the first level that BTC needs to reclaim for bullish continuation,” he said.
The general sentiment around the crypto market following the remarks of U.S. President Donald Trump and Treasury Secretary Steve Mnuchin is mixed.
Many companies are anticipating increasing efforts to tighten policies around the crypto market, which may pose difficulties for both bitcoin investors and exchanges that would need to vamp up anti-money laundering (AML) and know your customer (KYC) compliance.
Bitcoin could maintain stable at the current level or potentially drop down due to overbought conditions and either way, many analysts expect BTC to demonstrate a high level of volatility in the upcoming weeks.
Changpeng Zhao, the CEO of Binance, stated that bitcoin hitting $10,000 within six months after dropping to $4,000 in January in itself could already be considered as a positive factor.
“If I asked in January, BTC will hit $10,000 and $BNB will hit $29 by June, how would you feel? Most will say they would feel ecstatic. So, let’s be that way,” stated CZ.
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Last modified: March 4, 2021 2:38 PM