- Bitcoin's recovery stopped on approach to $7,000.
- The fundamentals are strong and imply further Bitcoin's growth in the long run.
Bitcoin stopped within a whisker of $7,000 only to treat to $6,600 by press time. Despite the recovery attempts, the first digital coin has been mostly range-bound on Wednesday, with a short-term bearish bias. Bitcoin's market capitalization reached $120 billion, which is 65.4% of the total digital assets in circulation.
According to the data provided by Intotheblock, over 48% of Bitcoin addresses are making money at the current BTC price, while 10% have a breakeven point around this level. Nearly 500,000 BTC was bought in the range from $6,600 to $6,800. Now they created a strong resistance area and obstruct Bitcoin's trip to the North as many holders rush to cash out once they reach the breakeven.
BTC/USD: Technical picture
From the technical point of view, $7,000 remains the key barrier that needs to be taken out to improve the technical picture and allow for further recovery. Bitcoin has gained nearly 25% in recent seven days, but it is still in a red zone on a month-on-month basis. Once $7,000 is cleared, the recovery may gain traction with the next focus on resistance zone $8,200-$8,400. It is created by a confluence of strong technical indicators, including SMA100, SMA200 and SMA50 daily and 23.6% Fibo retracement for the downside move from June 201 high to December 2019 low.
On the downside, the initial support is created by psychological $6,000. The overall trend remains bullish as long as the price stays above this level. However, a sustainable move below this line will increase the selling pressure and bring the price to $5,500. SMA200 weekly located on the approach to this level, may slow down the bears and trigger the recovery. This technical level was broken only once in Bitcoin's history, on March 12, though the coin managed to regain ground fairly quickly.
BTC/USD daily chart
BTC/USD: Fundamental picture
From the fundamental point of view, the cryptocurrency may be well-positioned for further increase. According to Ramón Ferraz, CEO of the Spain-based financial platform 2gether, believes that investors consider cryptocurrencies as new diversification tools in times of uncertainty. In an exclusive email comment to FXStreet, he explained:
During this complicated and unprecedented crisis that we’re currently experiencing, it seems that the interest in new digital assets is gaining strength and cryptocurrencies are being seen as new diversification alternatives, as we have seen in 2gether with the relevant increase in the volume of trading.
On the other hand, BTC has suffered in terms of price and volatility from the impact of the crisis. On March 12, already known as “Black Thursday” for the crypto community, BTC suffered a crash, losing up to 50% of its value compared to previous days. This could be seen as an opportunity to buy at a low price and future investment."
However, traders should be prudent and cautious as adverse external factors may change this scenario, he added.
The same view is shared by the head of Galaxy Digital Mike Novogratz and the head of Adamant Capital Tuur Demeester.
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