Bitcoin price rallied more than 5% on Sunday and extends gains at the start of a new trading week. The leading cryptocurrency by market capitalization registered two-week highs around $7,632 on Monday, showing further signs of strength after the recent dip below the $6,500 support area.
Bitcoin, which is down nearly 30% from highs above $10,000 registered in October, remains within an outright bearish trend. But the developments since last week may signal that the digital currency has already found a local bottom and could extend the recovery towards the end of the year.
Many investors start to perceive bitcoin as a safe-haven asset due its independency from governments and central banks. While the geopolitical risks have declined substantially since the US and China made mutual concessions and agreed a so-called phase one trade deal, there are other uncertainties in the global markets that will continue to test investor nerves in 2020, and some new risks may appear as well. Against this backdrop, the appeal of bitcoin could rise in the days to come. Moreover, the cryptocurrency may get out of the bearish market in anticipation of a halving event scheduled for May 2020.
In the short term, the BTCUSD pair needs to show a decisive break above the $7,600 area so that to target the key $8,000 handle. Once above this level, the bulls may head towards the $10,000. However, judging by the current demand which still looks muted, the cryptocurrency will hardly be able to regain this psychological resistance any time soon.
Also, it is possible that market participants will try to push the prices lower from the current levels in order to use more profitable entry points for fresh bullish bets. In this scenario, it will be important for bitcoin to stay above the $6,800 area, or at least the $6,500 support zone. In a wider picture, market sentiment still looks bearish and to change the dynamics for the better, the BTCUSD pair needs to stage a recovery above the 100-daily moving average which comes around $8,250.