Bitcoin price declined abruptly on Thursday in an aggressive rejection from the $10,000 psychological handle. The number one cryptocurrency derived support from the $9,000 handle and shifted into a recovery mode today, still struggling to overcome the $9,500 intermediate resistance.
There could be a few reasons behind a massive sell-off that briefly took the prices below the 50-daily moving average. First, global stock markets saw a widespread and deep decline caused by the resurgent coronavirus concerns as the number of cases in the United States exceeded 2 million people. Against this backdrop, investors started to express worries about the outlook for the global economy and its recovery.
Also, bitcoin’s plunge could be related to the liquidation of nearly $80 million longs coupled with the renewed volatility after a period of sideways consolidation. Another reason is of a technical nature. The $10,000 level represents a fairly strong resistance zone that caused bounces several times in the past already. It looks like the digital currency number one will need a strong bullish catalyst to make a decisive break above this level.
In the short-term, BTCUSD may spend some time in a consolidation mode before it decides on further direction. Now, the $9,500 region acts as the immediate resistance, capping recovery attempts. On the downside, the 50-daily moving average at $9,160 represents the key nearest support. As long as the cryptocurrency remains above this level, downside risks are limited.
The daily RSI reversed north but the upside impetus still looks too modest to bet on further gains on the intraday basis. Furthermore, despite the selling pressure receded, bears remain in control as long as the prices stay below the mentioned immediate resistance. On the weekly timeframes, BTCUSD looks set to finish the week lower. However, buyers could reemerge during the weekend and send the prices above $9,700.