On the weekend, Bitcoin plunged lower, falling from the mid-$6,000s range to $5,800 over the course of a day, marking a loss of over 10%.
Interestingly, this move coincided with a slight drop in the unofficial weekend futures of the Dow Jones Index as investors were hesitant heading into the week as to how the coronavirus would affect the economy.
Whatever the case, the drop to $5,800 made many crypto traders feel wary; understandably so, within the next day, Bitcoin is going to close its candle for the month of March, and it closing under the key historical support of $6,400 was something analysts felt would be a precursor to a further drop.
But at the eleventh hour, bulls stepped in, taking Bitcoin all the way to $6,475 as of the time of this article’s writing, just under 12% higher than the bottom.
Analysts believe that this move is a precursor to more bullish action.
Bitcoin Is Ready to Head Even Higher, Analysts Reckon
According to Bloomberg, the recent price action has allowed a key buy signal to appear: the Bloomberg Galaxy Crypto Index (an index of the top digital assets that includes Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, and EOS) recently printed a buy signal, according to a trend indicator, the GTI Vera Convergence Divergence Indicator.
A buy signal was last seen early on in January, when Bitcoin was trading in the mid-$7,000s. And a sell signal was seen near the end of February, when BTC was trading in the mid-$9,000s prior to the infamous March 12th capitulation, which has since been dubbed “Black Thursday.”
The sentiment that Bitcoin is strong from a technical analysis standpoint has been echoed by others.
After calling the recent weekend decline to the high-$5,000s and low-$6,000s, prominent Bitcoin trader “Flood” expects a strong reversal towards $8,000, pointing to the fact that there is little resistance from here to there according to the volume profile.
Importantly, a crash in the stock market could negate this scenario; almost all analysts agree that if the value of equities and other traditional markets fall off a cliff as they did on March 12th, another liquidation event in the cryptocurrency market will transpire, forcing Bitcoin much lower than where it is now.
Cryptocurrencies to Strengthen Through This Crisis
Even if this nascent market continues to fall, the consensus is that the ongoing crisis in the economy and in broader society will only strengthen cryptocurrency. Christel Quek, chief commercial officer and co-founder at Bolt Global, said to Bloomberg:
Central banks continue to print money and route it through expensive networks of people and banks, further inflating debt. A decentralized currency and exchange like Bitcoin breaks this cycle of money leakages. I see cryptocurrencies emerging stronger after the pandemic settles.
This was echoed by Raoul Pal, a former executive of Goldman Sachs and the CEO of Real Vision, who recently couldn’t “express how bullish [he is] on Bitcoin,” plainly stating how “all trust” in the “entire system” has been lost, leaving a power vacuum that is likely to be filled by a digital ecosystem that he has pointed to many times in interviews.
Indeed, with governments printing money like there’s no tomorrow and distrust in institutions rising (seen on social media), it may be natural for consumers to seek alternative ways to obtain their most basic needs, money and finance included.