On December 7, the Bitcoin price achieved a new yearly low, as the valuation of the crypto market fell by $16 billion within a 24-hour span.
Bitcoin (BTC) fell to as low as $3,210 on fiat-to-cryptocurrency exchanges like Bitstamp and Coinbase, which led other major cryptocurrencies and low market cap digital assets to fall by around 15 to 20 percent against the U.S. dollar.
Since then, the Bitcoin price has rebounded from $3,210 to $3,455, by more than seven percent within merely 12 hours.
However, traders are cautious in regards to the short-term price trend of the dominant cryptocurrency given the intensity of its recent fall and the volatility the market has shown throughout the past two weeks.
Positive developments continue to surround the cryptocurrency market as large financial institutions in the likes of Nasdaq and Fidelity make big bets on emerging infrastructure providers like ErisX, a strictly regulated cryptocurrency exchange in the U.S. market.
Yet, the prices of major cryptocurrencies are falling at a rapid rate, in most cases with low volume, suggesting that many assets are free-falling without high sell pressure.
As technical analyst DonAlt said, Bitcoin still remains below an important resistance level at $3,700, and the failure to break out of it could result in the asset remaining in a low price range between $3,000 and $3,500.
The analyst explained:
“Decent day with quite a big bounce across the board. That said BTC is still below resistance. If BTC wants to turn bullish on larger time frames I’d really wanna see it manage to reclaim the lowest zone on the chart ($3,740).”
In a bear market, especially in crypto, the prices of major cryptocurrencies tend to drop by large margins, unaffected by developments in the sector. For instance, several reports claimed earlier this week that the delay of the Bitcoin exchange-traded fund (ETF) of VanEck by the U.S. Securities and Exchange Commission (SEC) caused the price of BTC to drop substantially.
However, the delay of the VanEck ETF to February was expected by many investors in the traditional financial market because the SEC does not have any motive to go out of its way to prematurely approve an ETF prior to its final deadline.
Even if a Bitcoin ETF was to be approved or rejected, the event would likely have minimal impact on the current state of the market, because the market is so overwhelmed.
For Bitcoin to recover, the market has to start demonstrating exhaustion and extreme fatigue from the steep sell-off. Historically, in 2010, 2012, and 2015, BTC dropped by around 85 percent, underwent a several-month-long consolidation and accumulation phase, before engaging in a proper recovery.
The bear market of the cryptocurrency market will likely extend to 2019, and regardless of major developments that lay ahead including the VanEck Bitcoin ETF decision in February and the scheduled launch of the Bakkt futures market in January, the market will only begin to recover when bears and sellers lose momentum and control over the market.
Featured Image from Shutterstock. Charts from TradingView.
Last modified: June 14, 2020 9:35 AM UTC