Bitcoin Recovers Above $9,400, but Signs of Bullish Exhaustion Persist

Bitcoin recouped some of its losses Thursday, but upside was firmly capped by the $10,000 resistance, offering yet another sign that bulls are exhausted following the monthslong parabolic rally.

BTC/USD Update

The bitcoin price reached an intraday high of $10,027.19 on Bitstamp, which represents a nearly $1,000 recovery from Wednesday’s swing low. Bitcoin would later consolidate at $9,413, where it was down 3%. Over the 24-hour trading cycle, the largest cryptocurrency had gained 0.9%, according to CoinMarketCap.

BTC/USD: Daily chart.

The cryptocurrency is down $2,800 from its most recent high and has fallen $3,400 from its yearly peak. At current values, bitcoin has a total market capitalization of $169.1 billion. It was less than a month ago that bitcoin’s market cap was fast approaching $250 billion.

Bitcoin’s dominance rate – the share of the overall market held in BTC – remains above 65%. It peaked closer to 67% earlier in the week as altcoins shed market cap.

Most of the top coins were reporting gains on Thursday, led by double-digit advances in Litecoin, Binance Coin, Stellar and Tron.

Also read: The Week Bitcoin Dominated the Cryptocurrency Market.

Bitcoin Targets Sub-$9,000 Levels

Bitcoin’s recent pullback likely represents the start of a consolidation trend following months of accumulation. Technical traders are now eyeing $9,000 as the critical fault line; a break below this level could trigger a steeper fall back to $8,000 and eventually $7,400.

Some have attributed the decline to recent commentary from U.S. President Donald Trump and Treasury Secretary Steven Mnuchin. Earlier this week, Mnuchin expressed “concerns” about bitcoin and echoed previous comments made by the president referring to cryptoassets as “thin air.”

White House commentary on digital assets is more validation than anything. Barry Silbert of Digital Currency Group said the government’s comments on bitcoin are “wildly bullish” for the asset class as a whole.

The real reason behind bitcoin’s drop appears to be bullish exhaustion. When bitcoin peaked near $13,900, it had gained a whopping 345% from the December low. Gains of this magnitude are unsustainable and need to be corrected.

Even with the latest pullback, bitcoin is up threefold from December levels. There’s strong reason to believe that the current four-year cycle still has higher highs left to produce given how quickly the price has accumulated.

Bitcoin’s rising dominance rate could be a death knell for altcoins and tokens, which continue to struggle. Ethereum’s performance against bitcoin, which is seen as an important proxy for altcoin demand, has improved in recent days, but remains well below levels deemed attractive for entry. The ETH/BTC exchange rate rose 2% on Thursday to 0.02228, according to Bitstamp.

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.

Featured image courtesy of Shutterstock. Chart via TradingView.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi