Bitcoin price has been gradually regaining ground after a brief plunge below $4,000 for the first time in a year last week. Following some hesitation around $5,500, BTCUSD accelerated the rebound and registered four-day highs just shy of $5,900. As a result, market focus has shifted back to the $6,000 handle. However, the leading cryptocurrency by market capitalization is probably yet to find a bottom.
On Wednesday, bitcoin finished marginally lower but managed to close the day above $5,000, paving the way to further recovery after the recent massive rout amid a broad-based sell-off in the traditional financial markets. As the digital currency derailed the $4,000 figure, some market participants started to bet on further losses ahead. However, bitcoin managed to attract demand at one-year lows and shifted into a recovery mode. However, the current bounce looks unconvincing, and the possibility of another sell-off remains fairly high.
Of note, stock markets have stabilized somewhat today, mainly due to massive supportive measures announced by governments and central banks across the globe. But this will hardly be enough to calm down investors, as the coronavirus continues to spread, fueling concerns over the business activity, energy demand and the health of the global economy in general.
Should risk sentiment deteriorate significantly again, bitcoin may reverse its modest gains and target south again. In other words, it seems that it’s too early to call a bottom at this stage just yet, as too many risks are still there. So traders will continue to closely monitor the virus-related developments further.
From the technical point of view, BTCUSD needs to make a decisive break above the $6,000 level to confirm the recent bounce. Otherwise, the process may easily retarget the $5,000 figure and even plunge to fresh long-term lows before a reversal takes place. In the longer-term, as the panic abates, and investors will get back into the game, the digital currency will likely climb back to the $10,000 psychological level by the end of the year.