- Bitcoin hit its two-month high early Thursday, breaking over $ 9,400 amid the halving hype.
- However, the cryptocurrency was unable to secure its intraday gains as it revised down around $ 937 from the local top.
- The pullback started at the same level that Bitcoin’s upward attempts have been limited since the bull run in 2017.
It was a glorious morning for Bitcoin when the price surpassed $ 9,400 for the first time in two months.
The top cryptocurrency has been making a comeback since it tumbled more than 50 percent in mid-March. A price recovery in the second half of March, followed by a longer upward movement in April, helped Bitcoin to fully recover – from $ 3,880 to $ 9,478 on April 30.
Even so, the upward trend of the cryptocurrency indicates that fuel is running out as it flirts with its long-term technical resistance.
Descending trend line
The sharp downward trend line prevented Bitcoin from closing above $ 20,000, its all-time high, in December 2017. In August 2019, it again spoiled the bullish attempt at the $ 14,000 cryptocurrency in February 2020.
Even today, after testing the same descending trend line, the price of Bitcoin reversed wildly, dropping to just $ 8,541 on the Coinbase crypto exchange.
What it means for Bitcoin
Technical levels are psychological – places where the majority of traders tend to express a unified market orientation. So far, traders have viewed the descending trend line as their incentive to leave their long positions. They have not been able to go above the level since 2017.
Bitcoin could either break above the trend line to start a new bull run, or extend its downward pullback to start a deeper correction towards a similarly strong, blackened ascending trend line. Given the prevailing fundamentals, traders tend to keep their positions near the descending trend line.
This is due to the halving of Bitcoin, an event that will lower the daily mining reward rate of the cryptocurrency from 1,800 BTC to 900 BTC on March 12, 2020. Most analysts see this as a long-term bullish sign as the last two halves have followed significant price rallies in the Bitcoin market.
At the same time, the rapidly expanding coronavirus pandemic could cause investors to leave their risk positions to seek cash security, as was done in March 2020. This would reduce the short-term demand for cryptocurrency and prevent the descending trend line.
A disadvantage could cause Bitcoin to crash to just $ 5,000 before bouncing again to retest the descending trendline.
Photo by Kevin Butz on Unsplash
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