BITCOIN RISES AFTER SELL OFF BUT RISKS LIE AHEAD
On Tuesday, Bitcoin had a sharp decline that saw it reach a low of $5,800. Yesterday, the BTC/USD pair had some reprieve when it reached an intraday high of $6550. Still, this happened during a low-volume day, highlighting the ever-volatile nature of the crypto sector.
The current price is relatively low from where Bitcoin was trading two weeks ago when the price reached a high of $8,400. This was during the earning season when investment management company, BlackRock, announced that it was exploring a potential entry into the cryptocurrencies industry.
The Bitcoin market is struggling with demand. Bitcoin was established to offer three things. Firstly, it was to act as a replacement for fiat currencies. Secondly, it was created to offer a safer way for people to make transactions. Thirdly, it was intended to be a faster currency, especially for global transactions. It was also intended to offer cheaper transactional costs. To date, Bitcoin has achieved some of these roles but, it faces two major problems. It has not been widely accepted by merchants, its exchange rate is highly volatile, its exchanges have been hacked several times, it is not as fast as fiat currencies and mining it has become expensive.
The BTC/USD pair is currently at $6230, which is at the 23.6% Fibonacci Retracement level. The price is below the 50 and 100-day moving averages and on the four-hour chart, the RSI is climbing. Traders should take yesterday’s gain as an ideal point to sell the pair.