In the virtual currency world, the name of Bitcoin is much famous. Many investors have gained huge benefits after investing in this virtual currency. Over a period, it has gained more attention by investors and analysts who keep a watch on the rate at which the currency trade in the market and on exchange. Though Bitcoin has always seen upward movement in rate, the analysts believe that now it may show some downward movement and hence the traders and investors need to be alert to book the profit or wait for buying new bitcoins.
Bitcoin is hovering around the $10000 levels for a long time now. Even though it went close to $12000 recently, it could not sustain the momentum and declined to test $10000. However, for the last few days, it has been hovering below this level, and many traders are expecting some swings in either direction.
Things are not looking attractive for the cryptocurrencies in recent weeks, and ETH went to $ 300 from $500 in only some days. Many people are of the opinion that the bubble of DeFi has burst and it is touching new downlines without much support from long term investors.
Even Bitcoin is facing a similar situation as it fell from $12500 levels to below $10000 in just two weeks. The fall of 21% is a huge one for new investors who only started trading in cryptocurrencies after the pandemic struck the world in March.
The fall of other cryptocurrencies is attributed to the fall in the price of Bitcoin as many investors feel that if Bitcoin can fall, then every other coin can fall in a short duration. In this situation, most people feel that Bitcoin has made a temporary top at the $12500 level.
Understanding the CME gap
The CME is open only for about 23 hours a day while the Bitcoin trades for 24 hours a day. This leads to some gap in price, and this usually occurs on weekends when the markets close on Friday and again reopen on Sunday evening. However, the problem comes with CME allowing traders to place orders even when the markets are closed. In this situation, the unfulfilled orders leave a price gap in BTC.
One such huge gap is seen around $9900 on CME, and many traders are expecting that this level will offer good support for the BTC in the near term. Traders are often confused with such a gap-filling process, and the entire process is not so transparent for many people.
Others believe that long term support now stands at $7000, and this is where it can be considered as a value buy for most investors.
Analysts are also keenly watching the movement on TRX to understand the trend with cryptocurrencies. The bear market for cryptocurrencies started in 2018. Earlier in 2018, the unique chart patterns in TRX indicated a bear rally and the same thing happened even during the 2019 crash. After this crash, Bitcoin found its bottom around $3300.
Fibonacci support levels for BTC
As per some analysts, the support levels in the short term stays around $9665 for BTC. However, if this is not sustained in the weekly charts, it may move further down to test the next level at $9190. After this, the next 0.5 fib support for Bitcoin comes at $8168. In this way, traders who work on Fibonacci retracement levels are pointing out different support levels for the BTC. Most of them are of the opinion that the 0.618 fib retracement stands at $7146 and this might offer the best long term support for BTC. This is the price where most investors will feel comfortable to buy Bitcoin for the long term.
However, bulls are not in a mood to wait for such a long time, and they are expecting an immediate retracement after the CME gap level is filled at around $9800 levels. After this, the next resistance level is expected to be around $10400, and this level should be sustained for at least a few weeks in order to see any positive trend in the near future. After this level, the BTC is expected to resume its bull rally, and it may even cross the previous high in the next few months.
The overall economic situation around the world does not sound good as the coronavirus pandemic continues to affect all the economies. There is no sign of a vaccine for this virus shortly, and scientists are expecting it to come to the market only in 2021. Considering this scenario, the economy will need further stimulus which will come after the November presidential elections are over in the US. All these factors can further weaken the dollar, and this can boost the demand for cryptocurrencies at a global level.
In this situation, many investors may shy away from the traditional economy and move towards adopting the DeFi currencies in the future. Already China is taking huge steps towards bringing the digital Yuan, and similar moves may come from other countries. Such big news for blockchain technology can eventually boost the demand for BTC soon. Many analysts are expecting BTC to deliver double-digit returns in the next few months, and it would not be surprising to see BTC cross its previous high in the next few months.
Many new investors came to the cryptocurrency market after the coronavirus pandemic struck in the month of March. Even the price of BTC was very attractive at that level, and this also became an opportunity for old-timers to average their investment in BTC. Considering all these facts, it was clear that Bitcoin had bottomed at that level in the month of March and it has had a solid rally till now. Only in recent weeks, it has slowed down to some extent and fallen from $12500 to below $10000. However, support can be expected around these levels, and BTC may again cross its recent high in the time coming ahead, which can be much helpful for the traders.