The question now is whether the digital currency manage to extend the bounce and refrain from another sell-off
After four days of losses, the price of bitcoin bounced on Tuesday to reverse most of the previous decline as dip buyers reemerged. The coin found support just below the $25,000 figure to climb back to the $26,000 zone to turn nearly flat on the weekly timeframes.
Just as the largest cryptocurrency by market capitalization came to the edge of a bearish breakdown, the $25,000 support level managed to hold and thus triggered a local bounce that was fueled by a weaker dollar. The greenback started the week on a weaker note to retreat from multi-month highs seen above the 105.00 figure last week. Bitcoin tends to maintain a negative correlation with the US currency.
The question now is whether the digital currency manage to extend the bounce and refrain from another sell-off, given that the current market conditions are characterized by low liquidity and low trading volumes. Besides, bitcoin is yet to overcome multiple resistance levels, including the initial barrier around the $26,000 figure.
Also, a lot of sellers may reemerge in case of a bullish reversal, especially near the the mentioned level. In other words, the BTCUSD pair is yet to confirm the latest recovery that could be capped by a stronger dollar.
In this context, the upcoming US CPI and retail sales data will be in focus this week. Should the figures disappoint, the greenback may lose ground across the board, thus supporting recovery in the cryptocurrency market. Otherwise, BTC could retest the $25,000 support, this time in earnest.
In a wider picture, the coin needs to get back above the $28,000 barrier in order to retarget the $30,000 psychological level last seen more than one month ago. On the weekly chart, bitcoin looks directionless since August, with bearish bias dominating the market since a failure to hold above $30,000.