After a 2% gain over the weekend, bitcoin price is correcting lower on Monday. However, the downside momentum looks limited for the time being, which highlights the decreasing volatility in the cryptocurrency market. BTCUSD rallied from $6,900 to levels close to $8,500 within seven days, and the current retreat looks quite natural from the technical point of view.
Many market participants feared a major correction to take place after an abrupt rally, when the price spiked aggressively to $8,000 within just 30 minutes last week. But the digital currency stayed afloat and hasn’t fuelled profit taking, which may point to market stabilization and its nature which is gradually getting less speculative as day traders leave the industry.
Going forward, however, it’s too early to call a bottom as sellers may still reemerge. In the short term, bitcoin needs to keep above the key $8,000 figure in order to continue its ascent. But the selling pressure could intensify around the $8,400-8,500 area. Cryptocurrency traders should always remember that sentiment in this space can shift very quickly.
By Helen Rush
Senior Analyst at Capital Markets