Bitcoin (BTC) has been slowly recovering from the colossal blow it sustained two weeks ago following the coronavirus outbreak induced selloff. The cryptocurrency seems to be on the verge of breaking the $7k level.
But, there are three fundamental reasons why this asset seems uncertain to develop an upside momentum. They include:
#1 The prevailing global market uncertainty
Due to recent adverse events plaguing the global economic space, investors have become wary of investing or trading Bitcoin because of the fear of experiencing more volatility.
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BTC has been trading close to $7k this week, which is indicative that traders are coming into the market. However, for the price to rise above the said level, more traders have to come on board.
#2 Hard cash is currently preferable than Bitcoin
As the effects of the pandemic outbreak continue to grow, furloughed workers are in desperate need of cash to cater for their needs in this restrictive time. This is causing many to liquidate their digital assets, including Bitcoin.
#3 Young adults are under pressure
The cryptocurrency industry is dominated by people under 35. As the global crisis prevails, this population has significantly become disenfranchised and are struggling to meet up with so many demands.
Psychological Importance of the $7k Level
On March 25, the price of Bitcoin (BTC) rallied to a high of $6,977.69 on the heels of the US Senate’s approval of a $2 trillion stimulus package.
BTC is currently trading within the range of $6,806 – $6,511, with strong resistance at $7,000. A clean break above that resistance could send the price of BTC to $7,500 in the near-term.
At press time, BTC is trading at $6,666.34 and is in an upward channel. Should price break above the key resistance at $7,000, it could see the 200-day MA mark of $7,500 and subsequently $8,000 and above.
On the flip side, failure to sustain a break above the $7,000 mark could send the price down to support levels at $6,200, $5,850, and subsequently $5,500.