The start of the week saw Bitcoin rise above $63,000, but analysts at Bitfinex warn that the market could face a correction as the week progresses.
Bitcoin has gained 5% in the past 24 hours and 13% over the past week. The gains came amid a combination of factors including the end of the German government’s selloff of bitcoin and bullish sentiment around former U.S. President Donald Trump. Bitcoin’s price broke a 125-day low of around $60,200 over the weekend after hitting a low of $53,500 earlier in the week.
However, while the bounce could extend, analysts at Bitfinex suggest that traders may have to wait for decisive moves.
Share their thoughts via this week’s issue of Bitfinex AlphaAnalysts said Bitcoin’s recent rally above $60,000 could mirror the previous weeks, where it pulled back after a small late-week rally that proved short-lived by around midweek.
The news agenda drives the market, not the fundamentals.
Bitcoin’s Fear and Greed Index has moved from fear to neutral as sentiment improves after the recent sell-off. Supply concerns appear to have eased, and the market has recalibrated to new developments since Saturday.
“This shift in sentiment highlights the market’s ability to quickly integrate new information and adjust expectations accordingly, however we believe it is still important to focus on the market’s reaction during the first two trading days of the week,” the analysts wrote.
Aside from being an important area around $60,200 as a potential support level, it could also turn into a resistance area. If prices settle at decisively higher levels, Bitcoin could retest recent resistance levels near the $70,000 level. However, the decline could welcome fresh downward pressure – especially if the sell-off returns.
Weekend break, or a new sustained rise?
According to Bitfinex analysts, weekends have provided a respite for bulls over the past two months. However, bears have managed to resurface around midweek for the past eight weeks, starting on June 8, when prices last hovered around $70,000.
So the “news agenda” may dictate market movement in the short term. But traders may want to factor in the potential for new hurdles to emerge, including Mt. Gox’s creditors.