- A three-day rally that took the bitcoin price near $10,000 Thursday took a U-turn on profit-taking sentiment.
- The cryptocurrency fell to as low as $9,226 on Friday on US crypto exchange Coinbase, albeit sharply recovering into the European trade session.
- The price move downhill came as the U.S. stock futures slid on trade war worries, Fed’s warning about weak economic growth, and rising unemployment claims.
Bitcoin jumped towards $10,000 this Thursday but failed to secure the bullish territory for a longer timeframe.
The benchmark cryptocurrency jumped 16.15 percent in three days to hit $9,943 on Coinbase. The level served day traders opportunities to extract short-term profits. The capitulation ensued into the European trading session Friday, taking prices to as low as $9,226.
Technical readings on Bitcoin’s daily chart showed the cryptocurrency near a resistance confluence. The red bars, as shown in the chart above, represented areas with higher selling sentiment. The current block contained a long-term descending trendline that capped the price from pursuing full-fledged upside moves. It also contained $10,000, a psychological resistance level.
Bitcoin fell back after testing the red zone as its local top, pulling back sharply to its intraday low at $9,226. But a favorable buying sentiment near the local low helped price the push back above $9,500, indicating a potential retest of the red bar.
Fed Hype
Bitcoin’s exponential gains earlier this week came after Federal Reserve Chairman Jerome Powell’s warning about “deeper and longer recessions” in the U.S. economy. Trade pundits were expecting a grim market outlook, a sentiment that sent the U.S. equities lower on Wednesday.
A day later, the U.S. Labor Department dropped another bad news on the market. Its latest jobless data showed that the number of unemployment claims surged to 36.5 million. Bitcoin held its gains around the announcement. The Dow Jones, the S&P 500, and the Nasdaq Composite fell, on the other hand.
Nevertheless, the Wall Street indices surged dramatically before the New York closing bell Thursday. Around the same time, the bitcoin price had started correcting lower.
As of today, the U.S. stocks futures were hinting to open lower. The Wall Street Journal reported it is because of trade fears.
What’s Next for Bitcoin
Bitcoin was trading 1 percent higher into Friday, waiting to retest $10,000 as its interim resistance. But the cryptocurrency lacked volume to move beyond the descending trendline – breaking above it could declare a medium-term bull market.
Moving further, BTCUSD could maintain floor at or above $9,500, thereby maintaining its short-term bullish bias. A move below the level, however, could risk an extended fall towards $8,000-8,100 (the orange 200-day moving average curve).
Meanwhile, a deeper correction in U.S. stock market could increase downside risks in the bitcoin market. That has nothing to do with correlation but investors’ tendency to sell the profitable cryptocurrency to cover their losses from traditional assets.
Photo by Muzammil Soorma on Unsplash