Following yesterday’s market rally, Bitcoin was able to break above $3,600, but faces strong resistance at the $3,900 region. Bitcoin’s recent rally has proved to be highly lucrative for the altcoin markets, with many cryptocurrencies jumping 10% or more.
At the time of writing Bitcoin (BTC) is trading up 4% at its current price of $3,720. Earlier today, Bitcoin touched highs of $3,950, but lacked enough buying pressure to push the price above $4,000. Because its price was swiftly rejected at the $3,900 region, it is likely that this price level will act as strong resistance in the coming days.
What Analysts Are Saying
Although Bitcoin has found increased buying volume above $3,500, Mati Greenspan, senior market analyst at eToro, said that Bitcoin’s recent rally is the direct result of traders closing their short positions (commonly referred to as a short squeeze), which means that further downwards pressure could be seen in the coming days.
"People are looking to reduce their exposure and closing out high-risk sell positions before the holidays, and this is creating upward pressure on market prices, which is ultimately resulting in a rally," he explained.
Michael Moro, the CEO of Genesis Global Trading, agrees with Greenspan’s negative sentiment regarding the near-term market movement, explaining that it is critical for Bitcoin to hold $3,900 in order for buyers to step in.
“Buyers typically need to see prices holding for a few days before they really step in, and I think $3,900 is a key short-term level here before that really happens," Moro explained while speaking to CNBC.
Bitcoin’s inability to stabilize above $3,900 likely means that further downside is to be expected.
Altcoins Gain Some Upwards Momentum
Bitcoin’s recent surge has led the altcoin markets to trade up, with Bitcoin Cash being today’s best performing cryptocurrency.
At the time of writing, Bitcoin Cash (BCH) is trading up 27% at its current price of $130. BCH is trading up significantly from its recently established all-time-low of $75.
XRP is trading up 5.5% at its current price of $0.355 and appears to have validated its recent low of $0.28 as a support level. Assuming the market’s face further downside in the coming days, XRP will likely have support at $0.30 and $0.28, as both of these prices have proven to be historical support during recent drops.
Ethereum (ETH) has climbed back above $100 and is currently trading up 5.6% at its current price of $101 and is trading well off its recently established 2018 low of $83.