- Bitcoin has engaged in a slow and steady recovery since its drop to $30,000 two weeks ago
- A series of higher lows suggests that the big sellers have done their dumping
- Bitcoin looks set to range for a few weeks or months, which is the ideal outcome
Bitcoin is beginning to show real strength following its crash to $30,000 almost three weeks ago, edging fears of a medium term bear market to the side. Despite low volume and an inability to break $41,000, Bitcoin’s recent price action suggests that a period of healthy ranging is on the cards for the next few months as the market gathers strength for a potential push higher later in the year.
Bitcoin Building a Solid Base at $35,000
Bitcoin has staged a healthy recovery since its headline-making drop last month, putting in a series of higher lows since bouncing at $30,000:
While the volume may not be what we want to see for a quick recovery, the fact that the sell candles have stopped overwhelming the buy candles in size suggests that the bulk of the selling is done and that the danger of another immediate drop is over.
Last week we posited two scenarios that could play out in the coming weeks, one where Bitcoin rejected at $41,000 and fell back through $30,000 to usher in a bear market and another where Bitcoin ranged between $30,000 and $41,000:
So far the bearish thesis seems to have been eradicated, at least for now, while the idea that Bitcoin ranges for the next weeks and months looks more likely. In fact, Bitcoin’s surprising strength at the $35,000 region gives us a slightly more bullish edge to the ranging theory, suggesting that $41,000 could be tested again sooner rather than later.
Typical Recovery Playing Out
Bitcoin typically takes time to recover after big crashes like this, which the volume levels bear out. The March crash resulted in huge buy volumes as people snapped up cheap bitcoin that was trying to recover from a lengthy bear market. This is a much more appealing proposition for buyers than an asset that has just crashed 50% after spending 14 months going over 1,600%.
There will naturally be fewer buyers at this level, but the fact that the price is slowly pushing up, putting in higher lows as it does, shows that, at the very least, the big selling is done and the recovery can begin. A slow and steady recovery is probably the best thing that Bitcoin can do at the moment, building a strong base in the $30,000 region and allowing buyers to edge their way back into the market.
This price action would point to a possible 2013 repeat, which saw two bull runs in a single year, an outcome that would also fit Bitcoin’s typical modus operandi of strong end of year run.