Bitcoin price recovery has struggled after Bitcoin had the biggest weekly price loss since September 2020. The price dipped by 6% in the seven days leading up to January 17th , 2021 according to CoinDesk data. This strong of a weekly fall in the price of Bitcoin hasn’t been witnessed since the first week of September 2020.
Weeks ago, Bitcoin prices saw a nosedive, falling from $40,000 to $30,305 within a few hours. The cause was attributed to heavy selling in the spot market. Also, the crypto market spent the rest of the week trimming losses and tested $40,000 at some point. However, it ended the week just under $36,000.
Bitcoin’s price has struggled to recover amid continued accumulation by crypto whales. Meanwhile, the options market is heavily bullish, especially with the $52,000 call option. However, it is too early for us to call an end to the bull market correction. Patrick Heuser believes the reason is that cryptocurrency is still trapped in a narrowing price range.
Heuser, who is the head of trading at Swiss-based Crypto Finance AG, maintained that a move above the top end of the price range would confirm a breakout. The implication is a continuation of the broader uptrend of the price of Bitcoin. However, Heusser believes a rally to a fresh all-time high above $41,962 provides more credible evidence of a bull revival. Meanwhile, strategists at JPMorgan believe such bull revival will be dependent on the pace of institutional inflows.
The Reasons For Bitcoin Price Recovery Struggles:
There are few reasons why Bitcoin’s price recovery has had a slow pace in the past week. It goes without saying that there are many factors responsible for the rise and fall of Bitcoin price. But what are the key factors affecting Bitcoin’s recovery in recent weeks?
According to CrytoQuant CEO Ki-Young Ju, the reason for the struggling Bitcoin recovery can be attributed to crypto whales. Ju pointed out that these bitcoin whales started depositing large volumes of their Bitcoin holding to exchanges, hoping to cash in on Bitcoin’s record highs. This is similar to what happened in the 2017 bull run. These crypto whales contribute greatly to a major shift in cryptos’ value by moving their assets to exchanges.
Could it be a “healthy pullback?”
Many crypto analysts believe that the struggle of Bitcoin’s recovery is expected and is, in fact, a good thing. They say it allows Bitcoin to gather “momentum” before it ascends dramatic new highs.
Investors and traders are skeptical about government regulations against digital currencies. For instance, rumors have started that the United States Treasury Department is now monitoring users’ crypto-wallets. Brian Armstrong, CEO of Coinbase, even tweeted about this new development. Strong government influence could hurt the price of Bitcoin.
We believe that the current Bitcoin price recovery will continue at a slow pace until market correction initiates a bull revival. If you are a trader or investor, always pay close attention the current market volatility.
What are your thoughts on the latest market moves?