Bitcoin has started Monday off trading up slightly after experiencing increased levels of volatility over this past weekend. BTC has so far respected $3,800 as a level of support, but also faces strong resistance around $4,200, which is the price point at which the cryptocurrency’s price dropped after touching.
Although this recent volatility was unexpected, analysts seem to agree that it is part of a natural price cycle, and not overwhelmingly bearish, as BTC has still incurred decent gains over the past month.
Bitcoin (BTC) Stable Above $3,800 After Plummeting from $4,200 Yesterday
At the time of writing, Bitcoin is trading up nearly 2% at its current price of $3,900. This past Saturday, BTC garnered an influx of buying pressure that sent its price to highs of $4,200, which proved to be a strong level of resistance and sent its price spiraling down to lows of $3,800.
Because the cryptocurrency has firmly established $3,800 as a level of support and $4,200 as a level of resistance, it is possible that this will be a new trading range in the near-future.
Mati Greenspan, the senior market analyst at eToro, spoke about the volatility the markets experienced this past weekend in an email, noting that there is a bright side to the recent pullback, as Bitcoin found support $300 above $3,500, where BTC has been trying to build support since earlier this month.
“The level of the pullback is actually quite encouraging. In fact, most of Sunday’s 9% plunge was actually just erasing some of Saturday’s gains. Ever since the spike on February 8th, the market has been trying to build support at $3,500. Yesterday we stalled a good $300 above that,” Greenspan explained, further adding that “If January was a giant downward facing staircase, February has now turned into an upward one.”
Analyst: Yesterday’s Market Dump Was a “Simple Correction”
Although Bitcoin’s inability to hold support above $4,000 was slightly negative for traders and analysts who expected the markets to climb towards $5,000 in the near-future, it is important to note that the Sunday plunge came about after several weeks of relatively consistent price gains.
Alex Krüger, a popular cryptocurrency analyst on Twitter, spoke about the Bitcoin’s latest drop in a recent tweet, explaining that it was a “simple correction” that was bound to occur after the markets saw multiple gains throughout the month of February.
“Today’s crypto dump was a simple correction. Prices had just gone up vertically for 16 days without a pullback. Take $ETH for example: +38% without a pullback. Levered longs piled up. People FOMOed. $BTC reached the first strong resistance ($4200) and gravity kicked in.”
Today's crypto dump was a simple correction. Prices had just gone up vertically for 16 days without a pullback. Take $ETH for example: +38% without a pullback. Levered longs piled up. People FOMOed. $BTC reached the first strong resistance ($4200) and gravity kicked in.
— Alex Krüger (@krugermacro) February 24, 2019
Furthermore, Krüger, like Greenspan, found a silver lining surrounding the recent volatility, explaining that the longer the markets climb without a pullback, the bigger the crash will ultimately be.
“The longer price goes up without a pullback, the harder the crash once it comes. It is simple gravity. Can’t expect price to just move in one direction uninterruptedly.”
The longer price goes up without a pullback, the harder the crash once it comes. It is simple gravity. Can't expect price to just move in one direction uninterruptedly.
— Alex Krüger (@krugermacro) February 24, 2019
As the markets continue to gain volume as the week continues, traders, investors, and analysts will likely gain greater insight into whether or not Bitcoin’s bulls can garner enough buying pressure to continue pushing the cryptocurrency upwards.
Featured image from Shutterstock.