Since 10th April, Bitcoin has been above the $7000 range twice, and on both the occasions, corrections pulled it back under the range, its most recent pullback was on 13th April 22:00 UTC.
Such price movement between $6500 and $7000 has been confusing for the investors and a majority of traders were in crosshairs between longing or shorting Bitcoin over the long-term. In order to understand which option incurs more profit in the long-term, it is imperative to analyze the factors that go before taking a particular investment route.
Why investors may Short Bitcoin
In order to understand this option, it is important to observe the 4-hour Bitcoin chart. As mentioned above, Bitcoin has retested the $7000 resistance 4 times in the last 3 weeks. Bitcoin was not able to set itself completely apart from the resistance of $6600, $6800, and $7000, which indicated that the bearish pressure had kept the bullish pressure at bay in the last few weeks.
Currently, Bitcoin is consolidating near the $7000 range at $6856 and it is possible that it will move above the $7000 mark again. However, if Bitcoin falls below the range of $7k again, it will most likely completely exhaust the buying pressure and a significantly higher pullback could surface.
Considering the 50-Moving Average is also acting as an active resistance at the time of writing, Bitcoin may face a lot of resilience at $7000 and $7400, to sustain a rally towards $8000.
Another crucial reason why investors may short Bitcoin over the long-term would be in concern with the current financial meltdown. The world economy continues to be on the brink of collapse and another free fall in the traditional market may trigger another sell-off period in the digital asset industry as well.
Why Investors may Long Bitcoin
Now, when it comes to longing Bitcoin, it would all come down to whether investors believe Bitcoin has attained its bottom in the previous depreciation or not. On the previous chart, a legitimate argument was made for the overhead resistance at $7000.
In similar fashion, a strong case can also be made for the bottom at $6500. Over the past six months, Bitcoin has not dived below the $6500 mark until its recent market decline on 13th March. The largest digital asset has also been persistent aftermath of the collapse and registered a 90%+ percent hike over the past month.
$6500 could be a strong bottom because according to many analysts, Bitcoin may have capitulated at the time of press.
Popular Bitcoin commentator Tone Vays believed that, even though Bitcoin has been strongly correlated with stocks, it is correlated only in certain stretches which allows Bitcoin to break away in the current scenario.
He added that he foresees another lower low for the stock markets in the coming months but does not see Bitcoin following the same path again.
ConclusionÂ
At press time, Bitcoin kept inching closer to $7000 again which indicated that the price was still indecisive. However, with the halving event quickly approaching, it is a calculative guess that another major price swing is possible in the charts.