Bitcoin (BTC) has made a quick bounce from a dip to below $4,000 seen early on Friday.<\/p>\n
The cryptocurrency is currently trading near $5,415, up around 40 percent from the low of $3,867 reached around 02:15 UTC. That was the lowest level since March 25, 2019, according to CoinDesks Bitcoin Price Index.<\/p>\n
Equity markets are also flashing green alongside the slight recovery for bitcoin.<\/p>\n
S&P 500 futures are currently reporting more than 3 percent gains, while the Euro Stoxx 50 index the eurozones benchmark index has added more than 2 percent to its value.<\/p>\n
Asian markets had gapped lower at the open, tracking the overnight losses on Wall Street, but recovered a major portion of the losses before the closing bell.<\/p>\n
Year-to-date losses <\/p>\n
While bitcoins recovery looks impressive, the cryptocurrency is still down by more than $2,000 from levels near $8,000 seen early on Thursday.<\/p>\n
Bitcoin is now reporting a 27 percent loss on a year-to-date basis after showing gains of 46 percent just a month ago when the cryptocurrency was trading near $10,500.<\/p>\n
Back then, bitcoin was outshining gold by a notable margin, as the yellow metal was flashing a 6 percent gain for 2020. However, as of March 13, gold is back on top with a 7.5 percent year-to-date gain.<\/p>\n
The yearly gains were shed as the cryptocurrency plummeted by nearly 39 percent on Thursday during the relentless coronavirus-led sell-off in risk assets. The resulting liquidity crisis was accentuated by a massive long squeeze (forced liquidations) on prominent crypto derivatives exchanges such as BitMEX.<\/p>\n
Corrective bounce? <\/p>\n
Bitcoins sudden crash to $3,867 from $8,000 looked overstretched as per technical studies.<\/p>\n
The latest bitcoin correction has pushed BTC to oversold levels last seen in September 2019 and November 2019, co-founder and partner at Morgan Creek Digital Jason A. Williams tweeted today.<\/p>\n
Indeed, the widely tracked relative strength index (RSI), which oscillates between zero to 100, had dropped to 15 the lowest since November 2018. A below-30 reading indicates the cryptocurrency is oversold.<\/p>\n
As a result, the rise seen over the last few hours could be an oversold bounce,\" which occurs when investors view a preceding sell-off as too severe and ease selling pressure by squaring off short positions.<\/p>\n
Focus on risk sentiment <\/p>\n
Bitcoin will regain poise with risk assets, which will start seeing a sustainable recovery once there is stabilization in the coronavirus infection curve, Mike Alfred, co-founder, and CEO of Digital Assets Data told CoinDesk.<\/p>\n
As per the latest reports, coronavirus continues to spread in Europe and the U.S. Therefore, the current uptick in the equity markets could be a chart-driven bounce or investors may have taken heart from the Federal Reserves decision to inject $1.4 trillion worth of liquidity into the financial system.<\/p>\n
If the recovery gathers momentum during the U.S. trading hours, bitcoin could very well find acceptance above $6,000 once more.<\/p>\n
However, as long as the virus outbreak shows no signs of slowing down, the risk of further downside moves in equities and bitcoin would remain high.<\/p>\n
Still, dips below $5,000 would be transient, according to Alfred, as there is too much fundamental demand from long-term holders investors who bought bitcoins before the massive rally from $6,000 to $20,000 seen in the fourth quarter of 2017 and during the last five weeks of 2018.<\/p>\n
Currently, there are 12.19 million addresses that acquired coins below $5,700, according to blockchain intelligence firmIntoTheBlock.<\/p>\n
These players could increase their exposure on price drops below $5,000, especially with the miners' reward halving (a bitcoin supply cut) due in two months.<\/p>\n
Alfred said the price range of $2,500 to $5,000 offers incredible value for investors. <\/p>\n
Bottom in? <\/p>\n
The bear market, which began at the end of 2013, ran out of steam at the 200-week average in 2015. Back then, the average was placed near $220.<\/p>\n
The sell-off from the record high of $20,000 reached in December 2017 also ended at the 200-week MA in December 2018.<\/p>\n
The long lower wick attached to the current weekly candle suggests seller exhaustion below the 200-week average. If history is a guide, bitcoin looks to have found a bottom below $4,000.<\/p>\n
That does not necessarily imply a v-shaped recovery to $10,000. If the equities resume their sell-off, prices might revisit sub-$5,000 levels.<\/p>\n
Disclosure:The author holds no cryptocurrency at the time of writing. <\/p>\n
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.<\/p>\n
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Bitcoin Price Briefly Dips to 12-Month Low in Overnight Trading - CoinDesk - Coindesk<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Bitcoin (BTC) has made a quick bounce from a dip to below $4,000 seen early on Friday. Continue reading