Bitcoin’s Dead Cat Bounce Proves Limited as Price Struggles to Hold $3,400
Bitcoin’s overnight recovery proved limited on Saturday, as the leading digital currency struggled to maintain $3,400 in the wake of yet another 15-month low.
At the time of writing, the major exchanges were quoting bitcoin’s price between $3,365-$3,385. The cryptocurrency fell within that range on Coinbase, Bitstamp, Bitrex and Gemini, among others. However, bitcoin traded at a significant premium on Bitfinex, with prices hovering around $3,446.
Aggregate data courtesy of CoinMarketCap show a bitcoin price of $3,425, which represents a gain of 0.7% compared with Friday. BTC broke above $3,500 during the overnight session as part of a broader market rally but has failed to sustain those levels. This suggests that bitcoin is establishing a lower trading range following the recent selloff.
Nearly $6 billion worth of BTC has traded hands on virtual currency exchanges in the last 24 hours. BitMEX was the largest market, accounting for more than a quarter of total trades. The platform has emerged as a leading venue for shorting BTC during the month-long skid.
The protracted bear market has left bitcoin with a larger share of the overall market capitalization. The total value of all cryptocurrencies is now worth just over $109 billion. At $60 billion, bitcoin accounts for 55% of the total market capitalization, according to the latest available data.
Lower Highs, Lower Lows
As Hacked reported on Friday, the bitcoin price is likely to test $3,000 in the short term as the bears look to test new psychological lows. In terms of technically significant levels, the next parabolic support is located between $2,800 and $3,200. This has previously served as a high demand area.
Analysts and investors have struggled to understand the forces behind bitcoin’s precipitous drop. The downtrend, which began on the eve of the bitcoin cash hard fork, morphed into an all-out panic sale in a matter of days. The author recently argued that the BCH hard fork proved more costly than ever predicted because it forced a major bitcoin mining pool to divert all its resources toward supporting its version of the BCH upgrade. So the hard fork not only fractured the BCH community, but had a direct impact on the bitcoin ecosystem.
Once investors and speculators hit the panic button, long-term holders soon followed. Investor sentiment has yet to recover despite the recent wave of positive news flow involving institutional investment, custody services and exchange funding.
Some analysts believe that the SEC’s decision on a highly touted bitcoin ETF could dictate the market’s trajectory for the rest of 2019. As Hacked reported Friday, the agency has delayed its ruling on the VanEck SolidX Bitcoin Trust until Feb. 27, 2019.
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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