After a sell-off witnessed over the weekend, bitcoin started the week on a firm footing. BTCUSD regained the $6,000 handle, challenged the $6,400 region and extended the recovery to the $6,600 local resistance. Still, the prices failed to overcome this area and have retreated as a result. At the time of writing, the leading cryptocurrency by market capitalization is changing hands around $6,400, nearly flat on the day.
Despite the recent bounce from the $5,800 area, bitcoin lacks the upside impetus that continues to look unconvincing at this stage. Risk sentiment in the traditional financial markets has improved today, fueling a rise in stocks, and it looks like the digital currency has been following the general trend. The question is if the local rally in risky assets is sustainable. Considering the prevailing uncertainty related to the coronavirus outbreak, investors will likely further prefer cash, which means the upside potential in cryptocurrencies is limited as well.
In a wider picture, some traders bet on a rally in bitcoin following the current period of uncertainty and consolidation. As such, market participants believe that one above the $6,900 area, BTCUSD will retarget the $10,000 barrier in the medium term. However, at this stage, the digital asset continues to attract sellers on rallies, and this behavior shows that traders are not expecting a more robust rise in bitcoin price in the near term.
From the technical point of view, bitcoin remains within quite a limited trading range after a recovery from the levels below $5,000. On the upside, the key resistance arrives at $7,000. As long as the prices stay under this level, bearish risks will likely prevail. In the short term, BTCUSD may continue a modest consolidation, and a daily close above at least the $6,400 region will confirm the recent rebound. However, it won’t be enough to bet on more decent gains in the days to come. In the longer term, bearish risks persist as long as the cryptocurrency stays below the key moving averages around $8,000.
