Bitcoin seems to have found its feet and is currently stabilising above its 200-day moving average, at $46,000. This comes after an almost 20% sell-off over the weekend which sparked speculation of a crash. Bitcoin movement has been mainly flat over the last 24 hours but is down about 15% over the past week.
Sellers are expected to continue existing their positions over the next few days so a price increase isn’t expect to occur until after that.
Bitcoin is positioned for a short-term bounce, although the upside appears to be limited toward the $55,000-$60,000 resistance zone. Over the long term, weekly momentum indicators have shifted negatively. This is the first time that this has happened since April.
A busy weekend for Bitcoin
Over the weekend, the price of Bitcoin saw a huge plummet. On Sunday, prices bounced but remained below $50,000. In contrast, the coin was trading at around $57,000 on Friday morning.
The lowest prices were seen on Saturday when the coin fell to a low of $43,000. This was in response to rising fears over what the new Omicron variant will mean for the economic recovery.
As it stands, markets are still recovering from the uncertainty that Covid-19 has caused over the last 2 years. The new variant could mean that this instability lasts longer and has sparked concerns amongst investors.
On Friday, investors began to ditch equities for safer corners of the market as they tried to stabilise their portfolios. This caused the yield of the 10-year US treasury to move lower.
On Friday, the Nasdaq Composite underperformed the Dow and S&P 500, with technology stocks getting hit considerably hard. This selling extended to cryptocurrencies, with no fundamental reason prompting the sharp declines across the crypto sector.
Matt Maley, equity strategist at Miller Tabak noted, “It looks like somebody likely got hit with a margin call yesterday and thus was ‘forced’ to sell,” adding, “The Bitcoin market tends to be much more “thin” on the weekends, so that probably exacerbated the decline. Once the dust had settled, the buyer came back in and it stabilized.”
The past 48 hours of selling has built on recent declines for bitcoin. The coin officially entered bear market territory on Nov. 26, after dropping to a then seven-week low around of $54,000.
According to Ed Moya, Senior market analyst at Oanda, Bitcoin is in ‘no man’s land’ right now and does not seem to be going anywhere anytime soon. The analyst doesn’t expect prices to rise above $60,000 in the foreseeable.
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