After a 2% gain over the weekend, bitcoin is correcting lower. However its downside momentum looks limited for the time being, which highlights the decreasing volatility in the cryptocurrency market. BTC/USD rallied from $6,900 to levels close to $8,500 within seven days and the current retreat looks quite natural from a technical point of view.
Possible Stabilization
Many crypto traders feared a major correction on the heels of bitcoin's abrupt rally, after the price spiked aggressively to $8,000 within just 30 minutes last week. But the digital currency stayed afloat and hasn’t prompted profit taking, which may point to market stabilization as bitcoin becomes less speculative as day traders leave the field.
Going forward, however, it’s too early to call a bottom as sellers may still reemerge. In the short term, bitcoin needs to keep above the key $8,000 price to maintain its ascent. Yet selling pressure could intensify around the $8,400-8,500 area. Just remember that sentiment in this space can shift very quickly.