Markets
Bitcoin’s weekend rally doesn’t mean the crisis is over: Bitfinex
Bitfinex analysts have warned cryptocurrency investors to be cautious as bitcoin’s (BTC) rally over the weekend is not a sign that its correction is over; the asset could see more bloodshed in the near term.
In the latest Alpha version of Bitfinex reportExperts said the market’s reaction this week was critical, especially as reduced supply over the weekend could return when traditional markets open.
“No Man’s Land”
Since Saturday, bitcoin has resurrected Bitcoin price rose nearly 10% from $57,600 to $63,000, closing last week in the green. The asset broke above the 125-day range low of $60,200, which it broke earlier this month after news of the German government’s massive BTC selloff hit the market.
Market sentiment has started to improve after reports that wallets linked to the German government were almost empty. However, the positive sentiment may not last long as the BTC that German authorities moved to trading desks and exchanges has yet to be sold.
Although the supply from Germany appears to have been factored into the bitcoin market price, Bitfinex analysts believe that whether the selling pressure ends depends on how the affected trading desks execute their trades in the coming days.
While the change in sentiment underscores the market’s ability to absorb new information and quickly adjust expectations, analysts believe the market’s reaction over the first two trading days of the week cannot be overlooked for two reasons.
First, the low support level in the $60,200 range has now become a potential resistance line. Second, trading patterns over the past three months suggest that weekends are generally favorable for markets, especially Saturdays when supply pressure appears to ease.
“We are now in a no man’s land until we get a clear resolution above or below this level,” analysts said.
A news-driven environment
Aside from the potential resistance level and the three-month weekend trading pattern, the market is currently operating in a news-driven environment, where cryptocurrency prices have been driven by news agendas rather than fundamentals.
Given that concerns about selling pressure are not yet completely obsolete due to Mt Gox’s next creditor distributionsBitfinex analysts expect these headlines to continue to impact price movements. Therefore, the analysts urged investors to exercise caution in their trading strategies.