After recent declines took Bitcoin from over $4100 to about $3750 per-unit, prices have again stabilized and are trending higher. The market was able to put together a four-day rally to end last week on a high note, gaining nearly 5% for the week.
The cryptocurrency’s troubles are far from over, however, as the currency has had a very challenging time mounting a significant rally that takes prices back above the 4k level in convincing fashion. The longer the market struggles below this level, the more vulnerable it may become to a fresh leg lower.
A recent article from marketwatch.com highlighted some of the coin’s recent struggles and provided some insight into how recent weakness may affect the larger, bullish narrative. The article quoted Jani Ziedins of the Cracked Market blog, who stated “Bitcoin continues to hover underneath $4k resistance. It wasn’t all that long ago that we were talking about $9k support, then $8k and $7k. $6k and $5k followed not long after. Now $4k turned from a floor into a ceiling.”
The usage of Bitcoin and other cryptocurrencies is reportedly slowing rather than accelerating, and that could potentially mean lower prices. A recent article from Forbes.com quoted a report from the BIS that stated “No central banks reported any significant or wider public use of cryptocurrencies for either domestic or cross-border payments in their jurisdictions. Usage of cryptocurrencies is assessed to be either minimal or (‘trivial/no use’) or concentrated in niche groups.”
The lack of any fresh, bullish catalyst has weighed on the digital currency markets and the ongoing lack of any new inputs could potentially keep prices under pressure. Rallies are seen even in bear markets, however, and the cryptocurrency arena could see some significant upside on any news or rumors. Bitcoin and other cryptos will need to see something concrete in order to put together a long-term sustainable rally. Until these alternative forms of money are seeing more wide-spread use and acceptance, however, any potential upside is likely to be limited from recent levels and any rallies may present selling opportunities for eager shorts.
A chart of Bitcoin does not provide longs with a great deal of optimism. The market has traded largely sideways in recent months and has thus far not been able to mount the type of rally that is likely to pull in buyers from the sidelines. At current levels just shy of $4k, the currency could be in “no-man’s land” and may not see accelerated buying interest until a larger decline or significant rally is seen.
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