Bitcoin was erasing part of its gains two days after it established a fresh yearly high above $10,000.
The top cryptocurrency plunged to a new weekly low of $9,706 on Tuesday, down 1.48 percent from the trading session open. The downside price action extended bitcoin’s net weekly loss to 4.83 percent. At its highest, the cryptocurrency was trading at $10,199 on Monday, according to US exchange Coinbase.
So it appears, the plunge took place owing to profit-taking. Traders exited their long positions – seemingly – at an attractive near-term profit. While the strategy resulted in a minor dip, bitcoin still maintained its medium-term bullish bias, now up a little more than 34 percent on a year-to-date timeframe.
Michaël van de Poppe, a full-time day trader, said earlier today that bitcoin could calm down near the $9,400-9,500 range. Nevertheless, the prominent analyst warned about a deeper plunged if the cryptocurrency closes below the said area.
“Holding there would be a great sign,” he explained. “Losing it and I’d start to heavily watch $9,000. Overall still expecting some consolidation.”
On the other hand, Scott Melker of the Melker Project warned of a deeper pullback unless bitcoin closes above a psychological resistance level of $10,540. The analyst tweeted:
This time frame has looked bullish for months and remains so at the weekly close. I mean, look at that thing. A move above the red line makes a higher high and ends the bear case. pic.twitter.com/7GBaVaaCIA
— The Wolf Of All Streets (@scottmelker) February 10, 2020
Bitcoin’s overall gains this year also followed growing investors’ concerns about the impact of Coronavirus on the global economy.
The effect of the virus has bulldozed more risks atop risk-on markets. The pessimistic sentiment has moved investors to the safety of hedging assets, including Gold and the US dollar. At the same time, Bitcoin is posing itself as an alternative haven, which means it could register fresh gains ahead of the first quarter close.
According to WHO, the death toll from the Coronavirus has reached near 1,000. The global healthcare body warned that it might be “the tip of the iceberg” – a piece of bad news for stock markets overall.
“Is this peak bullishness for the stock market? Gold and bitcoin are up as investors don’t seem convinced about last year’s stock rally,” Marija Veitmane, senior multi-asset strategist with State Street told CNN.