Bitcoin lived through great January, February may be less spectacular if $9,000 gives way

Bitcoin (BTC) bulls seemed to feel disappointment with a failed attempt to settle above $9,600 and let the bears run the show, BTC/USD has been sliding down for the third day in a row amid technical correction after the recent spike. At the time of writing, BTC/USD is changing hands at $9,160, down 1.3% on a day-to-day basis. Notably, the number of in the money accounts settled at 77% amid divergence with the price movements. 

Optimists are still out there

Despite the recent price decrease, the majority of the market players express optimism about the future Bitcoin's price movements. From the technical point of view, many analysts regard $9,000-$8,800 as a key area and mantain bullish forecasts as long as the price stays above this zone.

From the fundamental point of view, halving, coronavirus outbreak in China, looming global recession and massive liquidity injections from central banks are among traditional suspects. 

Thus, Nigel Green, CEO of a financial services and advisory firm, deVere Group, believes that  bitcoin is a “safe-haven asset in times of uncertainty”. He says that it is the main reason why the coin demonstrated positive momentum in January.  

The ongoing upward trajectory of the price of bitcoin correlates to the spread of the coronavirus. The more individual cases that are identified, the more countries around the world that are affected, and the greater the impact on traditional financial markets, the higher the price of bitcoin has jumped. 

Meanwhile, China and some other Asian countries returned from Lunar New Year holidays. The re-opeing of Chinese markets has already triggered massive sell-off sacross traditional assets, including equities and oil. The influx of new traders may increase volatility on the markets, Vijay Ayyar, head of business development at cryptocurrency exchange Luno.

Post CNY (Chinese new year) also I think (played) a big role. Lots of money sitting on the sidelines with the long weekend and last week. We saw this in our Malaysia volumes as well on the weekend, lots of fresh money coming in post the CNY break.

BTC/USD: technical picture

From the technical point of view, the critical support is created by psychological $9,000. This area is closely followed by SMA200 daily at $8,880. Once it is out of the way, the downside is likely to gain traction with the next focus on $8,250, which is 23.6% Fibo retracement for the downside move from July 2019 high to December low. This barrier stopped the downside in the end of January and served as a jumping-off ground for another upside movement. Most likely, it will stop the decline and attract new buyers.

On the upside, We will need to see a sustainable move above $9,600 for the upside to gain traction. This area is regarded as the main barrier that separates us form and extended bullish move towards $10,000 and, potentially to 61.8% of the above-said Fibo retracement at $11,000.

BTC/USD daily chart