Bitcoin’s price was silenced on March 14, compared to its hyperactivity earlier in the week. The flagship token traded between $5,045 and $5,641 even though the asset lost over 50.8% on March 12. It has since regained significantly to sell at $5,300 at the time of writing.
Most of the investors and commentators in the crypto space are still trying to come up with a narrative that will explain the meltdown that hit the markets on March 12. For now, it appears the global markets, including cryptocurrencies, are mitigating fears that hit due to the spread of Coronavirus.
Some of the traders and commentators continue to blame BitMEX alleging foul play on their part made the situation to escalate to reach almost catastrophic levels. A neutral Doji candlestick appeared on the daily charts showing that traders are still unsure of the next direction that the Bitcoin price may take. This candlestick by itself is neither bullish or bearish.
Looking at the other indicators offers a clearer view of the current trend, and a look at the relative strength index (RSI) reveals that the indicator is flat in the oversold region. Looking at the 4-hour charts, analysts and traders notice that the RSI remains flat while the buy and sell volume decreases as Bitcoin trades within a narrowing range between $5,021 and $5,517.
Some of the traders are convinced that the short-term frame enhances a bullish case for Bitcoin since every 4-hour candlestick has formed a lower-high with the price descending lower. Nonetheless, the moving average convergence divergence, RSI trend upward, and Stochastic RSI, together with the MACD histogram, indicates an increase in positive momentum.
These types of bullish divergences have become the signal du jour for crypto traders. Moreover, tightening Bollinger Bands and the drop in trading volume also indicates that an explosive move is looming probably it will happen before the weekly close.
For now, the price is limited below $5,500, where a high volume node has formed on the volume profile visible range (VPVR). Strong support has formed at $5,200 and $4,850. If Bitcoin manages to rise above $5,500, the overhead is open, and the price could explode to $7,650. However, such an upside move depends on sustained volume coupled with traders’ confidence that the event that caused BTC to plunge to $3,770 has ended.
The current price action shows that the traders in the Bitcoin market are taking their profits as the token reaches a range top. Not many are opening long positions and buying on breakouts.
In the case that the price manages to surge above the strong resistance at $5,500 and reclaims the former support of $6,300 to $6,400, it would be an encouraging step for the traders who will most probably buy back into the market. Since Bitcoin is already in the oversold region and the volume gap between $5,500 and $7,650 can easily be exploited, a high volume spike could see the crypto rise significantly in the coming days.
Such a spike will push BTC price back in the $7,750 range where Bitcoin was trading before the meltdown. A sustained upside momentum will move the asset towards $8,500.
According to the daily charts, smashing the $5,200 support would seem to be far less than perfect, although the Bitcoin price bounced higher when the price plunged to $3,770 on March 13.
Up to today, there is enough interest in Bitcoin at $3,769. This zone is the place where BTC price almost dismantled during its steep drop. A move below this level will open up a possibility of a double bottom at $3,384 and $3,177 for the BTC price.
Everyone needs to remember that while it is not a typical scenario for the sector, it appears like the COVID-19 pandemic has caused a financial crisis in the traditional markets, which have, in turn, profoundly impacted the price of Bitcoin. As the situation worsens, investors anticipate that the markets will worsen. Hence, a self-fulfilling cycle riding on fear and threat of a long-term economic slowdown is impacting the asset prices.
In the coming weeks, it should be expected that there will appear a series of multilateral stimulus packages that will get launched by different governments. Therefore, the equities markets may rise form financial bailouts resulting in improvements in stocks, commodities, and investor sentiment for risk-on assets.
Until that happens, it is advisable to wait in the sidelines. Waiting is a great strategy until a bottom is discovered in the traditional markets. On the other hand, for those still actively trading, they should stick to defined ranges and rest in cash at the close of markets or bedtime every day.
Some Bitcoin investors are going for long positions and accumulate as a range develops. However, with the current economic uncertainty in the global markets, it might be better to keep the capital in cash to survive to trade another day.