Bitcoin had been able to break out of its red streak earlier in the year after posting 11 consecutive red weekly closes. As the market rallied, the digital asset had started returning some green weekly closes. That was until the market correction, and Bitcoin lost about $4,000 from its peak. This led to a weekly close for the previous week, and while it looked like a recovery might be on the cards, Bitcoin has posted another weekly red close.
Two red closures
Over the past few weeks, Bitcoin has seen some incredible moves that have regained confidence in the market. The cryptocurrency had surged as high as $25,200 before being slammed back down by the bears. Nonetheless, the cryptocurrency continues to maintain a strong uptrend, albeit at a much lower price level.
Due to the $25,200 retracement, the digital asset had recorded its second consecutive red close. Two weekly red closes are nothing to worry about in a highly volatile digital asset like Bitcoin, but they have often set a precedent in the past. An example of this comes in early April, when the asset posted two consecutive red weekly closes. There would be another 9 red closes, the longest in Bitcoin history.
However, considering other times when the digital asset had seen such trends, it hadn’t spent too long in it. An example of this is June when the market fell to $17,600. It was the second straight weekly red close, but the reversal came quickly.
A Bitcoin rebound in the works?
One of the biggest threats to prosperity is rising inflation. This primarily affects the purchasing power of the currency, depending on how high the inflation rate is. The Fed’s last three reports have shown that inflation rates are at their highest in 40 years. This understandably caused panic among investors.
With rising inflation, more and more investors are switching to cryptocurrencies like Bitcoin. Because the digital asset has always been ahead of the inflation rate. Where the inflation rate has reached as high as 9%, Bitcoin had had annual returns of more than 200% over the past year. Given this, it is expected that more investors will pour funds into the “digital gold”.
On-chain analytics firm Santiment has also revealed that it expects the digital asset to rally in the new week. This is because short positions on the exchanges ramped up after the price decline. With so many people betting against the market, this becomes an opportunity for investors to accumulate, and accumulation trends often precede strong rallies.
Bitcoin’s price is still holding up well. The digital asset had fallen below $21,000 earlier Sunday but had recovered to trade above $21,200. Bitcoin is also showing significant support on the 4-hour chart ahead of the day’s open. If the $21,200 support holds, it will likely serve as a rebound point for the cryptocurrency.
Featured image from GoBanking Rates chart by TradingView.com
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