After a considerable decline of bitcoin earlier this week, the cryptocurrency has consolidated at strong levels. Any shift from these levels will signal changes in the dynamics of the number one cryptocurrency. Despite the powerful wave of correction, bitcoin is still capable of resuming the upward movement.
On Thursday, BTC continued to fluctuate within the area of $54,000-$57,000. The BTC/USD pair was trading at the level of $54,5000. However, over the past day, the asset fell by 1.5% in an attempt to break the threshold of $58,000. Notably, investors still buy bitcoin as seen on the charts of daily trading volumes, which are approaching the level of $62 billion.
Given the current dynamics of BTC price and the mixed fundamental background, bitcoin is hesitant to pick up a trajectory even after reaching another historical high. The next target is the level of $58,000, which will indicate the end of the correction. In this case, BTC will have to wait for the right moment to start the next growth cycle. However, only a few investors will flock back to the crypto market as many traders will not risk entering the market with such high indicators. Besides, the likelihood that bitcoin will consolidate above $58,000 is rather low. The digital asset has already tried twice to approach this level but stopped at $56,000 - $57,000. This is due to the large number of sell options that are bound to this level.
Alternatively, BTC may edge lower to $50,000, which will signal a deeper correction. If so, it is too early to talk about the beginning of a downtrend as the adjustment is purely technical in nature. At the weekend, the market was overheated with long margin positions at above $60,000. At the beginning of the week, when the trading floors opened and liquidity increased, BTC went down. Taking into account the negative news, BTC sank even more. This was only an additional factor that aggravated the correction but it did not affect the uptrend.
If the BTC/USD pair drops to the $50,000 level, demand for BTC is likely to rise amid a surge in market activity. A correction to the level of $50,000 will be the most appropriate entry point for new participants. What is more, bitcoin is likely to get a new driver that boosts its stable growth. Given the end of the listing on Coinbase and the recent comments from the Fed, like the entire crypto market, bitcoin has no drivers for growth. At the same time, there are signals for a rebound of all crypto assets in the short term. For example, the Rothschild Investment Fund announced large investments in the Kraken crypto exchange, which is preparing to become a public company and hold a listing in 2022.
Importantly, bitcoin is flat amid market uncertainty. So, now, downward and upward movements look possible. In the long term, BTC is unlikely to lose its position and investment attractiveness. BTC is considered by many a digital gold and it is able to hedge inflationary losses. Besides, it may gain momentum amid increased institutionalization, which will become the main reason for the growth of BTC in the near future. For some time, bitcoin will continue to fluctuate around $53,000 - $56,000. Shortly after, the trajectory of the cryptocurrency is likely to become clearer. Yet, whether it will be a fall or a rise is still unknown,
The material has been provided by InstaForex Company - www.instaforex.com