With the beginning of the new week, bitcoin has won back some of the losses of the last days and is trading above $ 47,000 at the time of publication. Yesterday, the price of the cryptocurrency fell to $ 43,119, the lowest level since February 8.
As noted by Coinesk analyst Omkar Godbol, the rally is occurring despite signs of bearish reversal on longer-term charts. Over the week, the price of the cryptocurrency fell by 25%, forming a bearish engulfing pattern. On the weekly chart, sellers managed to push the price below the previous week’s opening level. Similarly, the 2017 bull market ended, after which bitcoin plunged into a 12-month decline and lost 83% in value, reaching lows around $ 3,100. The last week was the worst for bitcoin since the market crash in March 2020.
According to the analyst, it is too early to talk about the end of the bullish cycle, but the formation of such patterns may entail an increase in technically conditioned sales. Blockchain-level data also suggests a decline in demand. The number of addresses containing less than 0.01 BTC declined slightly, indicating weakening purchases from retail investors. The same is true for wallets ranging from 1 to 1,000 BTC.
“BTC has found a temporary basis,” said Jehan Chu, Managing Partner at Kenetic Capital. “Institutionals and long-term investors form the right backdrop, and speculators sense a buying opportunity.”
At the same time, he warned of volatility that will persist as long as buyers experience lows above $ 40,000 before resuming activity around $ 50,000.
Analysts at Santiment note that Bitcoin’s correlation with the stock market is now significantly higher than the average in history. Bitcoin tended to rise most strongly when this correlation turned negative, as it did in December 2020.
The relationship between the price of #Bitcoin and traditional stocks remains higher than the historical norm. As we’ve noted in previous data studies, $ BTC‘s rallies tend to be the most prominent when this correlation turns negative, as it did in December, 2020. pic.twitter.com/3TjuFSw0Tn
– Santiment (@santimentfeed) March 1, 2021
“Even during this correction, the outflow of bitcoins from exchanges remains significant,” writes analyst Michael van de Poppe. – This means that people continue to buy bitcoins to move to cold storage as an investment vehicle. This is a healthy correction. ”
Even in this correction, the outflow of #Bitcoin from exchanges is still heavy.
This means that people are buying their #Bitcoin to hold in cold storage as an investment vehicle and those are not selling.
We’re still early.
In a healthy correction. pic.twitter.com/b9zPKr6bJC
– Michaël van de Poppe (@CryptoMichNL) March 1, 2021
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.