Bitcoin’s Recovery Lacks Momentum as Price Returns Below $4,000; New Trading Range Established

The price of bitcoin traded lower on Wednesday, putting an abrupt end to yesterday’s rally attempt and signaling continued pressure on the cryptocurrency market as a whole. At the time of writing, BTC/USD was back trading below the psychologically significant $4,000 level as the pump-and-consolidation cycled continued.

BTC/USD Update

Bitcoin reached a session low of $3,831.00 on Bitfinex, having lost roughly 2% during the course of the day. The BTC price has since recovered to around $3,923, where it was still down 1.5%.

Aggregate market data courtesy of CoinMarketCap show an average price-per-coin of $3,911, down 2.2% over the 24-hour cycle. Trade volumes remained above $5 billion, with derivatives trading on BitMEX accounting for the largest segment of the market. At current values, bitcoin has a total market capitalization of $68.1 billion.

The market has experienced a sharp drop in volatility over the past 24 hours, with bitcoin trading within a $169 range. Nevertheless, bitcoin’s 30-day volatility index, courtesy of bitvol.info, remains near its highest level since March. The indicator registered 5.53% on Tuesday, according to the latest available data.

Most major cryptocurrencies were seeing red through the early morning session. Bitcoin cash was down nearly double-digits, while Stellar XLM fell more than 3%. XRP and Ethereum were each down more than 2%. The cryptocurrency market capitalization as a whole was $126.3 billion. Trading volume across the entire market reached $13.6 billion, a decline of roughly $1.2 billion compared with Tuesday.

New Trading Range

Bitcoin’s precipitous drop in the latter half of November has not been met with a commensurate recovery, a sign that the market had established a new trading range. Since bottoming near $3,400, bitcoin has made one significant recovery attempt back up to $4,500. However, that rally was short-lived with BTC quickly returning below $4,000. Against this backdrop, the market has clearly established a new range between $3,500 and $4,500.

At this time last month, market participants were wondering how long bitcoin will remain above $6,000 and whether its newfound stability would propel prices higher for the rest of the year. The outlook has taken a dramatic shift despite there being no major changes in market fundamentals.

As Hacked reported on Tuesday, the heavy selloff from $6,000 to $3,500 has had a major impact on the mining community. Hundreds of thousands of miners have put their operations on hold as the cost of operations far exceeded the monetary benefit of minting new coins. That being said, the decline in price and hash rate has triggered an automatic adjustment in mining difficulty, which should give miners still in business some temporary reprieve.

According to Blockchain.com, mining difficulty has fallen by nearly 16% since early October. That’s the second-largest drop in bitcoin’s history.

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.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, 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