February has seen a lot of volatility with Bitcoin (BTC) crossing the $10,000 mark a couple of times. Following a bearish weekend, BTC surpassed 10k with a golden cross on the daily chart. Despite all the bullish sentiment BTC failed to hold at $1100 and soon dropped as low as $9250 region on February 20.
After staying in the 9.6k zone for around 36 hours, BTC surged as high as $9945 in less than an hour. This 2% move from $9,700 liquidated a mere $15 million worth of short-side positions on BitMEX, as leverage traders have been delivering their positions over the past day or two when Bitcoin started to stagnate.
After testing the $9900 resistance bitcoin is currently trading at $9877 at the time of writing. According to analysts, there could be two possibilities from here on. BTC could either be at the early stages of a descending channel as the previous channel was already invalidated by the 10% drop. The key resistance is still at $9900, failure to break this could see BTC falling back to the $7500 region.
Bitcoin could go both ways
Considering a bullish scenario, the drop last week could also have created a wider ascending channel with support at $9500 region and the next resistance at $10,300.
Crypto trader HornHairs believes that BTC is facing strong resistance at $9900. However, he claims that if the support stays intact we could see a move above $10,000. He tweeted:
The Relative Strength Index (RSI) remains neutral, with a reading of 56.07 on the daily. The indicator did show that Bitcoin was overbought right before the earlier price dump. From there on, bitcoin has jumped up from 50.16. The weekly RSI remains the same.
The Moving Average Divergence Convergence (MACD) remains slightly bullish as well. MACD crossing bullish on the one-week chart has always been followed by price gains. The coming weeks will tell if everything is building towards a bullish reversal.
The upcoming Bitcoin halving is one of the many factors that most analysts are bullish about. When the halving takes place, the leading cryptocurrency will have an inflation rate of 1.8%, less than that of gold and US Dollars. Theoretically, lowering supply and increasing demand should push the price of any asset.
Is Corona cure bad for bitcoin?
Some members of the community even speculate that as authorities are slowly gaining control over the coronavirus outbreak, bitcoin’s momentum has also slowed down. Worldwide crisis often tends to scare people away from traditional assets that are directly affected in these scenarios. Decentralized currencies like bitcoin see rising demand during these times as it acts as a store of value.