Markets
Bitcoin’s Weekend Rally Doesn’t Mean the Crisis is Over: Bitfinex
Analysts at Bitfinex 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 witness more bloodshed in the near term.
In the latest Bitfinex Alpha reportExperts considered the market reaction this week critical, especially as the supply relief over the weekend could return when traditional markets open.
“Nobody’s land”
Since Saturday, bitcoin has resurrected nearly 10% from $57,600 to $63,000, closing last week in the green. The asset rose above the 125-day low of $60,200, which was broken earlier this month after news of the German government’s massive BTC selloff hit the market.
Market sentiment has started to to improve following reports that wallets linked to the German government were nearly empty. However, the positive sentiment may not be sustained for long as the BTC that German authorities moved to trading desks and exchanges has yet to be sold.
While Germany’s supply appears to have been factored into bitcoin’s market price, analysts at Bitfinex believe that the end of the selling pressure depends on how the trading desks involved execute their trades in the coming days.
While the shift in sentiment highlights the market’s ability to integrate new information and adjust expectations quickly, analysts believe the market’s reaction in the first two trading days of the week cannot be ignored 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 no man’s land until we have a clear resolution above or below that level,” the analysts said.
A news-driven environment
Aside from the potential resistance level and the three-month weekend trading pattern, the market is currently in a news-driven environment where cryptocurrency prices have been determined by news agendas rather than fundamentals.
As concerns about selling pressure are not yet completely obsolete due to the upcoming Mt Gox creditor distributionsBitfinex analysts expect such headlines to continue to have some impact on price movements. As such, the analysts urged investors to exercise caution in their trading strategies.