Bitcoin rallies 11% back above $42,000 as a multi-day sell-off subsides
May 20, 2021
- Bitcoin rallied as much as 11% back above $42,000 on Thursday as a multi-day sell-off subsided.
- One analyst says Thursday’s rebound is only a recovery within a downward trend.
But other experts have shrugged off concerns over bitcoin’s week-long plunge, adding that pullbacks are to be expected
Bitcoin rebounded as much as 11% back above $42,000 on Thursday as a multi-day sell-off subsided.
The price of the cryptocurrency plunged to just above $30,000 at one point on Wednesday, a more than 50% drawdown from its all-time high of nearly $65,000 in mid-April, before paring losses in the afternoon.
“The rebound in bitcoin today is exactly that, a rebound, not a turnaround,” Julius de Kempenaer, senior technical analyst at StockCharts.com, told Insider. “[Wednesday’s] price hit the support zone near $30,000 after bitcoin accelerated lower upon breaking below support that was located in the $42,000 to $43,000 area.
He added: “That former support area is now expected to return as a resistance level.”
The senior analyst also said that even if bitcoin would be able to push higher, “the way up is cluttered with resistance levels, which will make any advances much harder than we have seen so far this year.”
The trend on the daily chart is still down, he said, which suggests that this rally is only a recovery within a downward trend.
The Wednesday plunge, which spilled over other cryptocurrencies, was sparked by the announcement of the People’s Bank of China that digital tokens cannot be used as a form of payment by financial institutions anymore.
Binance Coin, Dogecoin, and Ethereum’s ether all nosedived more than 30% each.
“The current market drop is to be expected after a run-up over the last year of 10 times for most cryptocurrencies,” Charlie Silver, CEO of Permission.io, told Insider. “Bitcoin a year ago was trading at $7,000 and it ran up to $60,000. A pullback of half of the gain is to be expected.”
Prior to this news, the cryptocurrency space has already been experiencing multiple headwinds, from Elon Musk’s surprising bitcoin reversal due to environmental reasons to the Colonial pipeline cyberattack that brought in over $90 million in bitcoin ransom payments.
“We see the current price volatility and speculation as a short-term correction in a booming market,” Varit Bulakul, president of investment banking and digital assets at The Brooker Group said. “In the long term, we remain bullish on digital assets.”
Wednesday marked a seven-day sell-off, wiping out nearly 50% of cryptocurrency market valuation. But on Thursday, the market cap for global digital currencies came in at $1.86 trillion, climbing 37% from the previous session’s low of $1.35 trillion, according to data from CoinMarketCap.com.