Last week a 10% Bitcoin wipe out saw the digital asset revisit its $6K support. The drop was alarming and many investors feared it would lead Bitcoin to its year lows of $5K. Fortunately, as this support held, successfully bouncing back to $6.2K, Bitcoin avoided a further price bloodbath.
During the weekend, Bitcoin avoided any dramatic move. The drop in daily trading volume suggests that most investors are unsure of where Bitcoin is headed.
The start of the week is, however, offering clues. Bitcoin has started the week in the green zone. Although the gains at the time of writing this is a moderate 3% taking Bitcoin to $6,300, this could lead to a bang as prices attempt a correction.
A successful correction should see Bitcoin climb back above $6.5K. This will see sentiments turn bullish and buying momentum see Bitcoin attempt yet another breakout of the $6,900 resistance. If successful, this will see Bitcoin climb above $7K.
In the face of the COVID-19 pandemic and the financial destruction, Bitcoin has failed to react as many expected. Despite Bitcoin evangelists touting Bitcoin will come out as a winner due to the flawed financial system, the digital asset continues to be one of the worst performers.
When Can We Expect Bitcoin To Go Full-Scale Bullish?
The pandemic is not over and we still expect that governments will continue abusing financial tools to cushion economies from what is now clearly a recession. In the U.S, despite printing over $3 trillion to boost investors, economists say this will not be enough and the government will have to avail more funds.
This is proof that though the short term outlook for Bitcoin might still be gloomy, the long term has never been more bullish. Coming out of the recession, Bitcoin is set to be the asset of choice for investors. As some analysts have pointed out, during the 2008 financial crisis, gold did not rally going into the recession but rather going out of it.
The Bitcoin halving is also a possible full-blown bullish catalyst but it continues to be overshadowed by the pandemic. There could be a short term rally caused by hype when the event nears, but the gains are likely to phase out. This will leave the recession as the only major catalyst that can see Bitcoin go full-blown bullish.