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The crypto market played out well on March 19-20 amid the market crash, with Bitcoin (BTC) surging by almost 15% to climb back above $6,500.
Fundstrat Global Advisors LLC gave a thorough analysis of the most famous cryptocurrency saying it may need few months for Bitcoin to completely recover. If you were watching the Bitcoin movement in the last few days, you probably wondered why Bitcoin acted as if it were just another currency, tumbling down in comparison to the greenback. Let’s try to analyze this situation for a bit.
Right now, Bitcoin is trading approximately 40% below its mid-February high, with a particularly notable drop between March 12 and 13, when it lost more than $3,000 in around 16 hours. At the time of writing at 2:24 pm CET, Bitcoin was up by huge 14.42 coming back up to $6,555.
However, we might go easy on this rise because of the volatility of the whole situation and the times to come.
Fundstrat: Bitcoin Fall Came Together with the Fall of the Market in Whole
Fundstrat technical strategist Rob Sluymer says that since Bitcoin went down below its 2015-2020 uptrend, it left its price action “badly compromised.” Sluymer confirms that Bitcoin didn’t quite act as expected, as a “safe haven” some might add. This fall happened as assets from stocks to bonds and currencies have been fighting to find their space during this tremendeous hit to global growth coming from the coronavirus.
“The crypto breakdown over the past week mirrored the ‘get me out of everything’ panic that dominated all asset classes, whether they were defensive (bonds and gold) or not (equities). Lower highs and lower lows are in place for Bitcoin, leaving in a compromised, potentially vulnerable longer-term profile.”
He adds that Bitcoin has for sure undergo through more volatility than usual in recent days but stresses that the picture in whole isn’t “all gloom and doom though.” If we look at the history charts, it can easily be seen that the Bitcoin has held above its 200-week average, which Sluymer calls an important long-term structural support level for most asset classes and one that worked for the cryptocurrency in both 2015 and 2018.
“For now, technically we will again give Bitcoin the benefit of the doubt that it is attempting to bottom but recognize Bitcoin will likely need months of consolidation to repair the technical damage now in place.”
Bitcoin Will Rebound, But When?
And we hope these months don’t turn into years and are welcoming the price action turning more positive towards the end of this week, with the largest digital currency rebounding almost 15% to climb back above the $6,000 level.
Vijay Ayyar, Singapore-based head of business development at crypto exchange Luno commented:
“There was a lot of buying pressure sub-$5,000 as can be seen and clearly indicates seller exhaustion. These prices were potentially below running cost for many miners, and we’ve seen hash rates drop. Miners are also better off just buying Bitcoin at such prices so there could be that aspect as well.”
He added that since the whole industry is moving towards the long anticipated halving, a planned reduction in the Bitcoin mining rate to fight its inflation, that prices could hit $6,500 again before they settle somewhere between $3,000 and $6,000 until the next bull-cycle breakout.
“This is classic redistribution and would be very healthy for future Bitcoin price action and if we were to have bullish momentum going forward,” he said.