In the last 24 hours, the Bitcoin price has slightly recovered from $3,451 to $3,526 following the announcement of Fidelity to launch Bitcoin custody by the end of the first quarter.
The valuation of the crypto market has increased by $2 billion overnight as Bitcoin (BTC), EOS (EOS), and Ethereum (ETH) rebounded in the range of one to three percent against the U.S. dollar.
While the recovery of Bitcoin prevented a further decline in price to the low $3,000 region, traders generally agree that the dominant cryptocurrency still remains vulnerable.
DonAlt, a cryptocurrency technical analyst, stated that if Bitcoin fails to remain above the $3,300 to $3,500 range, it may face a quick drop to the $2,000 region.
“Sitting in the last buy zone before new lows. Cut some of my buys due to the breach of the top of the zone. Looking to re-add them if it is reclaimed. If green fails ($3,300) I expect a quick move into the $2,000s. If it holds $4,000 is on the cards,” the analyst said.
Bitcoin also could avoid a drop below the $3,000 support level if it engages in a recovery to $4,000 but based on its past performance and the lack of momentum of major crypto assets, it remains unlikely that Bitcoin initiates a strong corrective rally in the short-term without a major catalyst.
A cryptocurrency trader with an online alias “Mayne” explained that the price trend of BTC is leaning towards bearish as it rejected a resistance level.
Echoing the sentiment of other analysts, Mayne said that in an event that BTC fails to maintain momentum at its current level, it could drop rapidly below $3,000.
The trader said:
Was expecting more bullish PA at these levels, not looking great. Rejected from resistance and forming bearish MS on the H4. As I said earlier if we are going to bounce it will happen from these levels in my opinion, if we lose the swing low (x) I think we drop fast.
Previously, Mayne emphasized that Bitcoin could drop an additional 50 percent from the $3,500 level depending on its performance over the next few weeks.
With Nasdaq set to launch a Bitcoin futures market in the first quarter of this year and Fidelity, the world’s fourth-largest asset manager, planning to introduce its Bitcoin custody by March, there are major catalysts on the horizon that could fuel the recovery of the market.
In previous bear markets, crypto markets were slow and quiet. High profile investment vehicle and product launches that could potentially fuel the market were non-existent.
For investors, the active involvement of some of the largest financial institutions in the global market could serve as reassurance of the long-term performance and strength of the cryptocurrency sector.
Following an 85 percent drop in the valuation of cryptocurrencies, the sentiment around cryptocurrencies is undoubtedly bearish.
As a Multicoin Capital general partner Vinny Lingham said, the crypto winter is at risk of transforming into nuclear winter if both companies and blockchain projects continue to struggle throughout the months to come.
The efforts of companies like Nasdaq and Fidelity to strengthen the infrastructure supporting cryptocurrencies. Crucially, it could also prove to institutional investors that the asset class and the cryptocurrency sector are not a fad.
“The unequivocal answer is yes [crypto assets will survive]. As an exchange operator it’s not our objective to opine on prices,” NYSE chairman Jeff Sprecher previously said, emphasizing that Bitcoin has survived many bear cycles in the past.
In the short-term, however, given the tendency of crypto markets to move in cycles, analysts expect the bearish sentiment and price movement to extend throughout the first two quarters of 2019.
Last modified: May 20, 2020 12:52 PM UTC