Bitcoin – A Dead Cat Bounce or the Start of a Bull Run?A positive start to the week is usually a good sign for what lies ahead, though a break through to $3,800 levels is going to be needed.
Bitcoin jumped by 4.41% on Monday, reversing a 3% fall from Sunday with interest, to end the day at $3,749.3. While managing to reverse Sunday’s fall, there’s still a long way to go to reverse last week’s 13.9% slide that pulled Bitcoin into the red for the year.
A relatively range bound first half of the day saw Bitcoin rise from an intraday low $3,580 to a morning high $3,668.0 before finding support from the broader market.
Tracking the broader market, Bitcoin rallied to a mid-afternoon intraday high $3,799.4, breaking through the first major resistance level at $3,690 and second major resistance level at $3,789 before easing back.
For the bulls, a recovery from $3,500 levels and a hold onto $3,700 levels by the day’s end will be the positive, with Bitcoin tending to have a positive week should the week kick off in the green.
On the day, Bitcoin’s gains may have provided some comfort to the bulls, but it was Tron that once again grabbed the limelight with a 21.4% rally. Binance Coin, Cardano’s ADA, Ethereum and NEO also managed double digits on the day. The gains across the broader market added back $6bn, with Bitcoin’s dominance easing back to 52.3%.
It’s been another chopped start to the year, with Bitcoin down 2.2% since the 1st January, with the latest bout of volatility being attributed to the Ethereum hard fork that is due to take place tomorrow.
Following the Bitcoin Cash hard fork last November, which contributed to some sizeable swings across the broader market, the Ethereum hard for is expected to ultimately provide support to its network, as the blockchain shifts from a PoW to PoS consensus.
On the news wires, another angst for Bitcoin and the broader market could be the news of some movement in Bitcoin, with reports hitting the wires that as much as 60% of the total Bitcoin in circulation is sitting in active digital wallets.
The Bitcoin Whales have been largely dormant over the past 2-3 years, with the exception of a number who continued to provide support Bitcoin through the last year.
For now, it remains unclear whether the whales are looking to offload some of their coins or trade more actively. Either way, some degree of uncertainty is likely to drive volatility over the near-term, the first hurdle for the market being tomorrow’s hard fork.
At the time of writing, Bitcoin was up 0.45% to $3,766.0, with moves through the first hour supporting theorists talking of an imminent bull run.
Bear traps remain however and for Bitcoin to sustain Monday’s gains and gather some momentum, a move through to $3,800 levels to test the day’s first major resistance level at $3,839.13 is going to be needed.
Failure to make a move could see Bitcoin struggle to hold onto $3,700 levels through the day, which could lead to a resumption of last week’s slide. Bitcoin will likely to take its cues from the broader market through the day.
A pullback through the first major support level at $3,619.73 to $3,500 levels would certainly be a test of investor resolve, particularly with so much of Bitcoin’s supply sitting in active wallets.