Bitcoin Price Returns Above $4,000 as Signs of Bottom Emerge
Bitcoin’s price rebounded sharply on Wednesday, clawing back above the $4,000 level and raising optimism that the worst of the downtrend had passed. The leading digital currency still has a long way to go to convince the bulls that the path of least resistance is higher.
The bitcoin price reached a session high of $4,163.90 on Bitfinex Wednesday, as the market rebounded sharply from recent lows. At the time of writing, BTC/USD was trading hands at $4,107.90, having gained 5.8% on the day.
Technical indicators courtesy of the hourly chart show strong momentum for bitcoin. The relative strength index notched highs above 70 before falling to a still-bullish 63.5. The MACD is also trending in positive territory.
Aggregate data courtesy of CoinMarketCap show an average price-per-coin of $4,039, which represents a gain of 8.5% over the previous 24-hour period. Trade volumes were $6.2 billion, with spot trading rising steadily throughout the course of the rally. BitMEX, the popular crypto derivatives platform, saw its share of bitcoin’s daily turnover fall from more than a third to around 28%, according to latest data.
The wider cryptocurrency market rallied in lockstep with bitcoin in the middle of the week, with the collective coin market cap rising more than $10 billion to $132 billion. Trading volumes have held relatively steady over the past 24 hours, with total market turnover of around $17.5 billion. That represents the daily volume on digital currency exchanges. Activity in over-the-counter markets is likely just as high.
Have We Reached a Bottom?
The multi-week selloff in bitcoin and the broader market has made the bottoming out process difficult to gauge. Bitcoin plunged through multiple long-term supports en route to new 14-month lows. In the process, it has been reported that some 600,000 miners had closed down operations. Analysts widely regard the $6,000 level as the “break-even rate” for miners. Significant and prolonged drops below that level could lead to a drop off in mining capacity within the bitcoin network.
However, as Hacked reported over the weekend, there are now tangible signs that the market may have already reached its bottom. Technical analysis shows that the weekly support of around $3,620 has been maintained despite multiple attempts to drive prices lower. Although some exchanges reported a drop below $3,500 at the height of the selloff, markets quickly recovered above the weekly support identified above.
Although bitcoin is still very much in a bear market, short sellers appear to have run into resistance. That said, market participants can expect continued volatility until Friday, which is the last day to trade CME’s November bitcoin futures contract. The bitcoin volatility index, which tracks price fluctuations using the standard deviation of the daily opening price, has reached 4.71% over the past 30 days.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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