Bitcoin plunged today, but bounced back. (Photo Illustration by Jakub Porzycki/NurPhoto via Getty … [+]
NurPhoto via Getty Images
Bitcoin prices have taken a tumble lately, losing more than half their value since mid-April and declining to nearly $30,000 this morning.
The world’s most prominent digital currency reached $30,201.96 today, according to CoinDesk data.
At this point, it was down more than 55% from its all-time high of nearly $65,000, additional CoinDesk figures show.
The cryptocurrency had bounced back at the time of this writing, trading close to $37,000, and several market observers weighed in, shedding some light on the digital asset’s recent price movements and assessing its short-term prospects.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
‘Relentless’ Selling Pressure
“The selling pressure in the BTC market has been relentless over the last 24 hours, aligning perfectly with elevated inflows of bitcoin to exchanges seen on-chain,” said Sean Rooney, head of research at Valkyrie Investments.
“On Monday, Binance led the charge with over 53,000 BTC dumped into the exchange to be sold,” he stated.
Nick Mancini, research analyst at crypto sentiment data provider Trade The Chain, spoke to how developments like these affected price.
“Bitcoin is currently down 45 percent from its peak of nearly $65,000 in April,” he said.
“Short term sentiment appeared to be bottoming with price, but it looks like both were just consolidating for a further move down,” stated Mancini.
“The good news is that Bitcoin’s key liquidity levels in the $30,000-range held strong during the drop, which caused the price to rebound from $30,000 to near $37,000 in just one hour.”
“Key support levels are $28,500, $24,000 and $20,000, which all match up with corresponding liquidity levels on the order book,” said Mancini.
David Keller, chief market strategist at StockCharts.com, also commented:
“The downturn to $30,000 for Bitcoin made good technical sense as that is a 100% retracement back to the January lows. After a severe selloff like this, it's all about finding stability.”
“Where do we see buyers coming in with enough force to push the price back up?”
“So far, $30,000 is the new floor for Bitcoin, given the previous price support and the influx of buyers this morning,” said Keller.
‘Oversold’ Market
In light of recent events, and the declines that bitcoin has suffered since roughly mid-April, the market may have overreacted, noted analysts.
The digital currency’s relative strength index (RSI), a technical indicator used to get a sense of an asset’s momentum, recently fell to “the lowest level since March 2020, indicating Bitcoin is extremely oversold,” said Mancini.
He also noted that the Moving Average Convergence Divergence (MACD), another momentum indicator that technical analysts use, “is also the lowest it has ever been in Bitcoin’s history, further indicating Bitcoin is oversold.”
“The market is due for some type of bounce,” said Rooney, but he noted that “a sharp recovery in the short-term is unlikely.”
“A correction this size in the middle of a bull market seems like a fish out of water, but the lack of mania topping patterns suggests the bull run is not over,” he stated.
“Long term fundamentals on-chain remain robust with new users coming into the network.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.
