Bitcoin had been able to break out of its red streak earlier in the year after making 11 consecutive red weekly closes. With the market recovery, the digital asset had begun to return some green weekly closes. That is until the market correction, and bitcoin lost about $4,000 off the top of its value. This resulted in a weekly close for the prior week, and even though it looked like a recovery might be on the horizon, bitcoin has recorded another red weekly close.
Two Red Closes
Within the last couple of weeks, bitcoin had seen some incredible movements that had returned faith in the market. The cryptocurrency had risen as high as $25,200 before being beaten back down by the bears. Nevertheless, the cryptocurrency continues to maintain a strong bullish trend, although at a much lower price level.
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Due to the retracement back down from $25,200, the digital asset had recorded its second consecutive red close. Two red weekly closes are no cause for alarm for a highly volatile digital asset such as bitcoin, but it has often set a precedent in the past. An example of this is back at the beginning of April when the asset had seen two consecutive red weekly closes. It would go on to see another 9 red closes, the longest in the history of bitcoin.
However, looking at other times when the digital asset had seen such trends, it had not spent too long in it. One example of this is back in June when the market had declined to $17,600. It was the second consecutive red weekly close, but the reversal was swift.
A Bitcoin Rebound In The Works?
One of the biggest threats to wealth is rising inflation. This primarily impacts the purchasing power of the currency depending on how large the inflation rate is. The last three reports from the Fed have seen inflation rates hit the highest they have ever been in the last 40 years. This, understandably, triggered panic among investors.
With the rising inflation, more investors are moving to cryptocurrencies such as bitcoin. This is because the digital asset has always been ahead of the inflation rate. Where the inflation rate has reached as high as 9%, bitcoin had seen yearly returns of more than 200% last year. Given this, it is expected more investors will move funds into the “digital gold.”
On-chain analytics firm Santiment has also revealed that it expects the digital asset to recover in the new week. This is due to the fact that short positions on exchanges have ramped up following the price decline. With so many people betting against the market, it becomes an opportunity for investors to accumulate, and accumulation trends often precede sharp recoveries.
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Bitcoin’s price is still holding up nicely. The digital asset had previously fallen below $21,000 on Sunday but had recovered once more to be trading above $21,200. Bitcoin is also showing meaningful support on the 4-hour chart ahead of the opening of the trading day. If it maintains support at $21,200, then this will likely serve as a bounce-off point for the cryptocurrency.
Featured image from GoBanking Rates, chart from TradingView.com
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