Bitcoin broke a 12-day losing record on Sunday, rising back above $20,000 as part of a broader crypto rally.
Bitcoin rose 16%, from a dip that touched $17,599. Ether, which had dropped to $881, climbed 26% to $1,140, while the rest of the crypto market also saw gains. Bitcoin seemed to be holding its gains, trading at about $20,500 as of 8AM Monday in Singapore.
Paul Veradittakit, a partner at crypto-focused hedge fund Pantera Capital said he felt institutional investors might have been sensing a bottom, and picking up tokens for long term holding.
Analysts however feel that this may just be a temporary respite from a broader selloff given market sentiment about crypto right now. Even with the rally, Bitcoin is still 30% down for the month, and 70% from its all time high in November.
One factor noted by analysts was that as Bitcoin dropped on Saturday, it fell below $19,511, the high it had hit during its last bull run. Previously, in 12 years, Bitcoin has never dropped below a previous cycle’s high.
It also broke through a technical support level of $18,300 according to Katie Stockton, managing partner and founder of Fairlead Strategies. The next technical support level down, which Bitcoin now has a higher than normal chance of hitting would be $13,900.
Many analysts see the $20,000 level as a key psychological barrier however, due to it being a previous high in 2017, and feel if Bitcoin can hold above it now for a few days, investors will see it as a bottom, and jump in, driving prices up.
Mati Greenspan, founder of Quantum Economics said the $20,000 level “has acted as both support and resistance on multiple occasions. If we can get and hold above that level it will be quite bullish.”
Conspiring against Bitcoin however is the string of bad news, from a slowing economy, to the Fed hiking interest rates. As many see all investment turning sour they are pulling out to cash, and crypto is no different. And as they do, a declining market only accelerates the effect.
Meanwhile Crypto-lender Celsius is under federal investigation for freezing accounts, likely due to lack of liquidity and bad bets, Babel Finance followed in Celsius’ footsteps on Friday, and crypto hedge fund Three Arrows Capital suffered such massive losses it is considering an asset sale.
All of which are not boosting the mood of the crypto community, and which is the reason an asset class with a market cap of roughly $3 trillion in November now is only worth about $900 million.
