Higher-than-normal selling volume pushed bitcoin down in early trading Thursday before managing to recover.
Bitcoin (BTC) was trading around $9,297 as of 20:00 UTC (4 p.m. ET), slipping just 0.18% over the previous 24 hours.
At 00:00 UTC on Thursday (8:00 p.m. Wednesday ET), bitcoin was changing hands around $9,270 on spot exchanges such as Coinbase. Three hours later, heavy selling volume sent bitcoin down 3% to as low as $8,980. Bitcoin’s price is below its 50-day moving average, but above the 10-day. Such a combination is a sideways bearish signal for market technicians.
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“We’re still in a tight trading range; $9,000 is the key to hold,” said Rupert Douglas, heading of institutional sales for crypto asset brokerage Koine. Bitcoin’s dip to below $9,000 is the first time that threshold was crossed since June 15. When it happened 10 days ago, just as on Thursday, the world’s largest cryptocurrency by market capitalization was able to bounce right back.
“The market seems to be taking a bit of a breather after testing $9,000 last night and bouncing pretty nicely,” said Dave Vizsolyi, head trader at Chicago-based crypto firm DV Chain. A massive amount of bitcoin options, to the tune of $1 billion, has traders thinking more volatility might be ahead. “I think the options and futures expiry tomorrow will continue to drive flows,” Vizsolyi added.
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George Clayton, managing partner of New York-based Cryptanalysis Capital, says he is concerned with economic data for the balance of 2020. Cryptocurrencies are not immune to traditional market gyrations.
“Crypto is currently acting like a risk-on asset and the technicals look sketchy,” Clayton said. “I see both of these elements as short-term bearish.” He pointed to the Atlanta Federal Reserve GDPNow forecasting a second-quarter U.S. economic contraction of an astounding 46.6% compared to the previous year. GDPNow’s estimate of GDP performance is based on its available data. It’s a significantly more bearish outlook than what most analysts are expecting.
“I’m quite bullish on bitcoin by this time next year,” said Neil Van Huis, of crypto liquidity provider Blockfills. “However, there could be a lot of whiplash in between. I guess that is the beauty of the markets.”
Although bitcoin is up over 28% this year, it hasn’t exactly been a smooth ride in 2020.
Despite being down as much as 32% on spot exchanges in March during the coronavirus-induced crash, June has had steadier bitcoin price movement. “I think there really is no real directionality in bitcoin…