Bitcoin price made a quick pop above $43,100 in the U.S. trading session but uncertainty is still the dominant sentiment among traders on Jan. 11 and bulls and bears are split on whether this week’s drop to $39,650 was BTC‘s bottom.
Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin (BTC) has traded tightly around the $42,000 level as the global financial markets digested U.S. Federal Reserve Chair Jerome Powell’s statements on the upcoming fiscal policy changes.
Powell indicated that the central bank is prepared to “raise interest rates more over time” if inflation continues to persist at high levels, but analysts were quick to note further comments suggesting that a low interest environment could persist for some time.
It’s possible that traders may have interpreted these comments positively and while it is not possible to connect Powell’s comments to direct price movements, BTC did manage a quick surge above $43,000.
“It is really time for us to move away from those emergency pandemic settings to a more normal level. It’s a long road to normal from where we are.”
Here’s a look at the ongoing debate on whether the crypto market is positioned to head higher in the coming days.
Bulls call the bottom
This across-the-board drawdown saw BTC fall by nearly 40%, while Dogecoin (DOGE) is down 79% from its highs, but according to bullish analysts, recent technical developments suggest that the market has reached a bottom.
According to crypto analyst and Twitter user Will Clemente III, Bitcoin is “entering the Buy Zone on Dormancy Flow” as highlighted on the following Bitcoin entity adjusted dormancy flow chart, which “essentially compares price to spending behavior.”
“This bottoming signal has only flashed 5 times before in Bitcoin’s history.”
A Death Cross looms
Despite today’s spike to $43,100, many analysts are pessimistic about Bitcoin’s short term prospects and caution that a potential “death cross” on the the daily chart has historically been a strong bearish indicator.
As shown below, the 50-day moving average for is perilously close to falling below the 200-day moving average, a convergence which in the past resulted in sharp price declines.
Bitcoin Archive said,
“Bitcoin is approaching the “Death Cross.” The last time this happened in June the price dropped 20% more over 31 days. That would take us down to $34K by the 9th of Feb if this repeated.”
As for the altcoin market, the recent price weakness in the USD and BTC pairs was addressed by analyst and pseudonymous Twitter user ‘Pentoshi’, who posted the following tweet suggesting a more bearish performance in the near term for alts.
For the time being, traders appear content to play the waiting game to see if the crypto market reverses course of stays range-bound for the foreseeable future.
The overall cryptocurrency market cap now stands at $1.998 trillion and Bitcoin’s dominance rate is 40.3%.