Crypto Frontline

Bitcoin Set for Recovery

Bitcoin Set for Recovery

Bitcoin Set for Recovery
February 17
13:19 2018

Since February 6th 2018, the Bitcoin price began to trade on the upside. After making a low around the 6400 area on the Coinbase exchange, dropping below 6000 on other exchanges, Bitcoin is now approaching the 11,000 area and looks step for a deeper recovery. It looks like the buyers had been encouraged by the low price, and since the drop was more than 50% from the highs, buying on that dip proved to be a good strategy.

Good performance but uncertainty ahead

Following the launch of the Bitcoin futures on the CBOE exchange, the Bitcoin price had been under pressure, dropping from 19,900 towards the 6400 area. As many analysts anticipated, the Bitcoin bubble had burst and caught unprepared those that thought the bullish trend will extend on the upside indefinitely.

One of the key issue that made investors so risk averse was the fear of Bitcoin taxation and the fear of governments imposing rough regulation that could hurt the development of the cryptocurrency industry. Signals are mixed since some countries like China and Russia want to ban all activities related to cryptocurrencies. On the other hand, some of them, like South Korea want to come with regulation that could help the cryptocurrency industry develop.

Getting back to the Bitcoin price, it is now located around the 11,000 figure and some strong resistance is expected around 11,500. On the downside, support is expected around the 9,000 figure. In the medium term, we expect a deeper recovery towards the 14,000 area. However, we do not expect the high made around the 19,900 area to be reached anytime soon.

From the contrary, there are still reasons for fear. The trust and confidence investors had will only return if there will be a regulatory framework in play for cryptocurrencies that will be adopted in a relatively short time and that will help the industry to develop. There are no signs that can show it will happen, so downside risks are still big. The Bitcoin price is set for recovery at the time of writing now that full SegWit implementation had been announced, but we expect to see how much the leg up will manage to extend.