Since December 8, the Bitcoin price has increased from $3,210 to $3,588, by just about 12 percent against the U.S. dollar.
In the same time frame, the cryptocurrency market added $11 billion to its valuation, avoiding a further drop below the $100 billion mark, which could have been critical for the short-term trend of the market.
Most major cryptocurrencies including Ethereum (ETH) and Bitcoin Cash (BCH) have been able to rebound from low double digits, as technical indicators started to demonstrate extremely oversold conditions.
But, traders and technical analysts remain cautious towards the short-term price trend of cryptocurrencies until major resistance levels are broken.
$3,700 For Bitcoin
Since early December, the value of Bitcoin has continuously fallen from the mid-$4,000 region, struggling to maintain its momentum and show any sign of stability.
According to DonAlt, a prominent cryptocurrency technical analyst, until Bitcoin breaks out of the $3,700 resistance level, it will remain in a tight range between $3,300 to $3,600, unable to engage in a major price movement.
The analyst said:
“Another good day for BTC. That said it’s still nowhere close to turning bullish on the higher time frames. While the low timeframes look decent, BTC hasn’t even reclaimed the previous trading range. Until it does, no swing long trades.”
As Alex Krüger, an economist and a cryptocurrency trader, recently emphasized, BTC is in a significantly better position to enter an accumulation phase and a consolidation period because it has been able to minimize its loss during several steep market sell-offs.
When compared to both Ethereum and Bitcoin Cash, Bitcoin has kept its value fairly well given the intensity of the market crash throughout the past two months.
ETH and BCH have recorded 93 percent and 95 percent losses respectively against the U.S. dollar, and BTC would have to drop another 72 percent from the current price range to experience a similar drop as the two digital assets.
“Performance from all-time-highs to date, for the main cryptoassets: BTC -82%, XRP -86%, ETH -93%, BCH -95% (using Bitfinex’s data). These may all look equally bad. It is not so. The difference between -82% and -95% is a further 72% drop,” Krüger explained.
Market Still Nervous
Several analysts have reaffirmed that as long as the dominant cryptocurrency remains below $3,700 and struggles to demonstrate a major breakout, the market is at risk of dropping to a new yearly low.
Historically, the cryptocurrency market has taken around 67 weeks on average to recover from a large correction and achieve a new all-time high.
While positive developments like the Nasdaq, Bakkt, and NYSE futures markets are around the corner and are expected to launch in the first quarter of 2019, it could easily take until the second quarter of next year for the cryptocurrency market to begin its recovery.
A proper bottom has not been established by BTC and other major cryptocurrencies, as well as small market cap ERC20 tokens, have not shown any signs of a large corrective rally.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: March 4, 2021 3:14 PM