Following a brief spike above the $9,000 handle, bitcoin price retreated back below the 200-DMA and turned muted around the $8,700 region this week. On the downside, the leading cryptocurrency by market capitalization deceives support at $8,500 and struggles to overcome the $8,800 area. The token lacked the momentum to confirm a break above the $9,000 and had to correct lower after a false breakout. Now, everything depends on the ability of bulls to defend the above mentioned support.
Interestingly, bitcoin behavior doesn’t confirm its status as a safe-haven asset this time. On Tuesday, risk sentiment deteriorated rapidly on the news about a new China virus. Investors pushed a panic button, with stocks declining globally. Still, the bitcoin price barely reacted to risk aversion despite it is considered as a safe asset in stress times. Of note, the sentiment has improved quite quickly, with most markets recouped losses by the end of the trading day, after the Chinese authorities take measures to prevent new coronavirus from spreading across the globe.
Still, the latest dynamics doesn’t mean we won’t see a rally towards the $10,000 psychological level over the next few weeks. The fact that the bulls dared to attack the $9,000 figure, shows their readiness to make further upside attempts after a pause. Moreover, market participants could send BTCUSD even lower, probably to the $8,000 level, or the 100-daily moving average marginally below this mark, just in order to reenter the game at more attractive levels. It is also possible that the digital currency will use the $8,500 area as a base for another rally following the current consolidation.
Early on Wednesday, the pair shows a modest bullish bias around $8,750 and the fact that traders keep the token afloat may point to the upside risks at this stage. In a wider picture, as long as bitcoin remains stuck between the 200- and 100-daily moving averages, the sentiment is mostly neutral. The prices need to firmly get back above the 200-DMA in order to confirm their readiness for another bullish run.