Bitcoin’s Price Shows Stabilizing Potential After Five Months in the Red

Bitcoin’s price held in positive territory on Wednesday, as the leading digital currency carved out a more stable trading range following one of its worst periods in seven years. The leading digital currency continues to trade below $4,000, which has become a significant psychological resistance.

Tepid Gains

The bitcoin price held above $3,800 on most major exchanges. At the time of writing, it was valued near $3,810 on Coinbase and Bitstamp. A $140 premium was observed on Bitfinex, where BTC/USD was valued at $3,952.

Aggregate data courtesy of CoinMarketCap show an average price of $3,850.43, a gain of 2.2% on the day. The move higher follows consecutive days of negative price action that pushed BTC values south of $3,700. According to CCN’s bitcoin tracker, the leading digital currency notched a session high of $3,983.43. The price must clear $4,000 to break from the descending pattern and attack vital resistance areas above $4,300.

In terms of market activity, bitcoin saw daily trade volumes of $4.6 billion, a notable improvement over New Year’s Day. With a market cap of $67.2 billion, bitcoin accounts for 51.2% of the overall market.

Return to Stability?

Over the past five days, bitcoin’s price has returned just 0.4%, which reflects more predictable trading patterns following massive swings in both directions. Prior to the selloff that engulfed the market in mid-November, bitcoin’s volatility index had fallen to the lowest level in 22 months.

Bitcoin’s value fell by 11% in December, its fifth straight month in the red. The leading digital currency lost more than a third of its value in November, marking one of the worst stretches in history.

While bitcoin has carved out a more stable trading range since falling to consecutive yearly lows, bearish risks continue to lurk in the shadow. There isn’t much in the way of fundamental drivers at the moment, though traders are keeping tabs on a keenly awaited bitcoin exchange-traded fund (ETF) proposal.

The U.S. Securities and Exchange Commission next month is expected to deliver a ruling on the VanEck SolidX Bitcoin Trust. Although the agency has rejected dozens of bitcoin ETFs already, its ruling on the VanEck product could have major implications on the market.

Until then, technical forces will continue to dictate market flows. Price action in recent weeks suggests that bitcoin has established a new price floor near $3,100. However, some community leaders like Anthony Pompliano believe that a drop below $3,000 is likely at some point in the near future. The founder of Morgan Creek Digital remains strongly bullish on bitcoin’s long-term potential but believes further downside is in the cards. Read more:  No FOMO: Bitcoin Price Under Pressure as Bullish Optimism Fades.

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.

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