The digital asset needs to hold above the $35,000 figure on a daily closing basis in order to resume the ascent
Bitcoin price surged to fresh all-time highs around $42,000 last week and has been retreating since then. The leading cryptocurrency by market capitalization, which has more than quadrupled in the past year, slipped to the $32,200 area earlier in the day before trimming intraday losses to $35,200, with market volatility remaining elevated these days.
In the short term, bitcoin needs to hold above the $35,000 figure on a daily closing basis in order to resume the ascent and regain the $40,000 psychological handle. On the positive side, the prices managed to hold above the critical ascending 20-DMA (today at $31,200) during the recent sell-off. As long as the BTCUSD pair stays above this moving average that represents the key support, downside risks remain limited at this stage.
The massive liquidation in long positions seen during the weekend was caused by the elevated volatility in the market. However, in the longer run, the digital asset will stay attractive as it has become a hedge against inflation and low returns on other asset classes as the increasing supply of money by global governments in response to the coronavirus crisis erodes its value, making bitcoin and other cryptocurrencies more attractive for investors.
At this stage, the question is if BTCUSD manages to shrug off the current weakness and regain its bullish momentum that would take the prices to fresh all-time highs. It is possible that the prices will retreat to the mentioned moving average that should withstand the selling pressure. Otherwise, the digital coin could see a more pronounced correction and even erode the broader uptrend. On the upside, the immediate resistance now arrives at $36,000, followed by the $38,000 handle. If the downside pressure intensifies any time soon, the $30,000 figure will come into market focus.