Following six consecutive days of losses, bitcoin bounced from lows and regained the $5,000 handle. However, the leading cryptocurrency by market capitalization is yet to confirm a break above this level as there is a possibility of profit-taking on further bullish attempts.
The digital currency market is trying to stabilize after the recent rout but the recovery process looks too fragile so fat to call a bottom and bet on further gains. Nevertheless, BTCUSD may accelerate higher towards the $6,000 handle if the prices manage to settle above the 100-SMA in the hourly timeframes.
The swing low around $3,800 could act as a bottom if the current bounce proves itself as sustainable. Of note, the cryptocurrency shifted into a recovery mode amid some signs of stabilization in global stock markets on Tuesday. Still, risk aversion persists, and investors remain cautious as the coronavirus spread continues across the globe, posing recession risks for the economy. Against this backdrop, market participants may refrain from a more aggressive buying of bitcoin and other digital assets, as it looks like they still prefer cash, even to gold.
From the technical point of view, the picture in the daily timeframes remains bearish. The daily RSI turned higher but remains in the oversold territory, suggesting there is further upside potential in the short term. On the other hand, if the pair fails to make a decisive break above the $5,600 region, it may dip back under the $5,000 level and possibly even lower.
Despite some technical indicators are pointing to the possibility of further upside correction, investor sentiment may deteriorate at any point. In other words, bearish risks still persist both in the hourly and daily timeframes. In a wider picture, the downside potential remains as long as BTCUSD holds below the 100-, 200-, and 50-daily moving averages arriving at $8,300, $8,500, and $8,800, respectively. On the upside, the important resistance comes around $5,500-$5,600.