- Bitcoin has stalled under $35,000 for the second time in a week
- Even if it broke $35,000 it still needs to crack $42,000 for bulls to have confidence
- Volume profiles suggest sellers are still in control
Bitcoin continues to stall under the key $35,000 level despite a strong reaction from its latest drop underneath $30,000. This marks the second time that Bitcoin has attempted and failed to cross this barrier, suggesting that another return to the lower $30,000s could be imminent. Volume profiles also show that this is still a selling market, asking the question of when buyers will step in.
Bitcoin Falters at $35,000 Again
The current attempt to beat the $35,000 resistance level represents the second attempt since it dropped below this level last week. The first attempt was rejected on Thursday resulting in a drop to $30,000, but a steady recovery over the weekend followed by a strong bounce last night brought Bitcoin back up to this point once again:
If Bitcoin doesn’t have the strength to get through $35,000 this time around then we can expect it to continue to range, which was one of the three outcomes we suggested at the very start of the month could be on the cards:
This is similar to what has happened, giving us a pretty clear resistance point if Bitcoin does crack $35,000:
Volume Suggests Buyers Are Staying Away
Even if Bitcoin were to break $35,000 and show intent in tacking $42,000, one thing to keep an eye on is the volume:
The difference in the volume profile between the recent drop and the March 2020 drop couldn’t be more vivid. In March 2020 every man and his dog was snapping up Bitcoin, thinking it was dramatically undervalued even after it had doubled in price from the lows of $3,750. In contrast, daily selling has outweighed daily buying in 8 of the past 13 days, illustrating a real lack of confidence from buyers and suggesting that many are still sitting on the sidelines before they buy.
This lack of confidence doesn’t mean that the price will inevitably go lower, but what it means is that very few people are willing to buy bitcoin because they believe it will go lower. If price remains in this $30,000-$42,000 channel for an extended period then these fears will likely be banished and we will see more green candles than read as buyers step back into the market.
The only time we would likely see the kind of buying volume we saw in March 2020 again would be if Bitcoin were to experience a flash crash into the $20,000-$25,000 region, and even then there’s no guarantee if the buying public still think it’s overpriced. Only when we see similar buying volume or we see a steady swatch of green buying days can we be more confident that the seloff is over.