Bitcoin – Bulls Hit $4,000 but Can’t Hold, Leaving the Week Finely Balanced

Bitcoin gained 0.77% on Wednesday, following on from a 4.33% rise Tuesday, to end the day at $3,810.

It was a day of two halves for the cryptomarket’s front runner, with a particularly bullish start to the day seeing Bitcoin rally to an early afternoon intraday high $4,043 before hitting reverse.

The early part of the week had seen momentum in favour of the bulls. In contrast, Wednesday’s mixed session will be a reminder for side lined investors looking to jump back into Bitcoin and the broader market that sentiment can shift in a matter of minutes and that the momentum trades of old are not as sustainable as they were going into last December’s $19,891 high.

Through the early part of the day, Bitcoin’s rally to an early afternoon intraday high $4,043, saw Bitcoin break through the first major resistance level at $3,871.5 and second major resistance level at $3,962.2 to hit $4,000 levels for the first time since 5^th December before easing back.

Resistance at $4,000 ultimately proved too great on the day, with news of possible market manipulation by Bithumb contributing to a 2^nd half of a day reversal that saw Bitcoin slide back through the first major resistance level at $3,871.5.

An almost $300 swing in half a day would have barely been visible on a Bitcoin candlestick this time last year, but at current levels it accounts for almost 10% of Bitcoin’s value and has a material bearing on sentiment.

While there’s plenty of debate on correlation between Bitcoin and the broader global financial markets, of interest will be the accelerated reversal in Bitcoin late in the day, a rate hike by the FED and a plan for two more hikes next year raising funding costs for financial assets. It’s all about profitability and, as the FED’s path to monetary policy neutral continues, it’s getting pricier and, with Bitcoin still languishing at current levels, the risk of another meltdown may have some investors responding to Powell et al’s latest decision.

Elsewhere, the most significant move of the day was made by Bitcoin Cash ABC that appears to have made some progress in the Bitcoin Cash war that started back in mid-November, Bitcoin Cash ABC hitting a day high $144.57 before easing back to end the day at sub-$130 levels, still a 20% rally on the day, but it could have been so much more….

For the Bitcoin bulls, striking Wednesday’s $4,000 price target was the key event of the day for the broader market and, while downside risks remain, the return of the crypto’s much loved volatility has seen trading volumes begin to return and that’s not a bad thing when considering how far the market has fallen through the year.

Looking at the trading volumes across the broader market, 24-hour volumes have recovered from as low as 11m back on 15^th December to 21m levels through Wednesday, which should ease some concerns over crypto traders pulling the plug to move back to the more mature asset classes.

It’s going to be choppy out there as the year comes to an end and, while we can expect the news wires to have some influence, it’s going to be a faceoff between the bulls and the bears and hitting $4,000 levels on Wednesday is certainly a statement of intent that could draw in some much needed interest.

Bitcoin’s dominance stood at 53.9%, continuing to signal bullish sentiment across the broader market, reflected in the upward trend in the total crypto market cap, up from $101bn on 15^th December to $120bn at the time of writing.

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