Throughout the past three months, the bitcoin price has flirted with the $4,200 resistance level, often struggling to maintain momentum above the key $4,000 mark.
Several traders have demonstrated concerns over the extended period of stability demonstrated by bitcoin because, in late 2018, the cryptocurrency recorded a drop of around 50 percent following three months of stagnation in the $6,300 to $6,500 range.
However, a cryptocurrency technical analyst known to the community as “Galaxy” has said that once bitcoin breaks out of a key resistance level above $4,000, it could potentially recover to $5,500.
The analyst explained:
“According to Bulkowski’s study, more than 60% of ascending triangles with declining volume end up breaking upwards with an average price rise of 35%.”
“That gives us a target of $5500 BTC once the breakout is confirmed.”
No Scenario For Bitcoin is Confirmed Yet
Many technical analysts and traders remain cautiously optimistic on the price trend of bitcoin, partially concerned about the inability of bitcoin to cleanly break out of $4,000 and test major resistance levels.
Throughout the past week, BTC has remained relatively stable in the $4,000 to $4,100 range, unable to rebound to the $4,200 level since late February.
At the time, economist and crypto market analyst Alex Krüger said that BTC endured a short-term correction as soon as it reached its first major resistance, following a prolonged upside movement.
He told CCN.com:
“It is a simple stops run. Prices had just gone up vertically for 16 days without a pullback. Take $ETH for example: +38% without a pullback. Lots of levered longs piled up. And people FOMOed in. BTC reached the first level strong resistance ($4200) and a correction ensued.”
“As it is with any other asset class or market, the analyst emphasized that a prolonged bullish movement is often met with a large pullback.”
As such, it remains unclear whether bitcoin would be able to climb up to a reasonable range above $4,000 and hold its momentum, avoiding a short-term drop to its current level.
On the technical side, due to the difficulty bitcoin has had in finding any meaningful momentum or an upside price movement above $4,000, it may require a significant push to break out of $4,200 in the near-term, which it retraced from last month.
While bitcoin recorded a minor loss on the day, several major crypto assets in the likes of TRON, Cardano, and OmiseGo recorded gains in the range of 5 to 10.5 percent, with Cardano recording the largest gain against both bitcoin and the U.S. day among the three.
Bitcoin Hashrate Versus Price, What Does it Show?
Since January 2018, the bitcoin price has dropped by nearly 80 percent against the U.S. dollar. Consequently, analysts expected the hashrate of the Bitcoin network to decline, proportionally to the price of BTC.
However, throughout the past year, despite a noticeable dip in September 2018, the hashrate of BTC has continuously increased.
The gap in the hashrate and the price suggests that miners are willing to mine at a loss for two possible reasons: it is difficult to get rid of existing equipment and electricity commitment or are expecting the price of bitcoin to increase in the long run.
Last modified: March 4, 2021 3:51 PM