Bitcoin is up only slightly on Monday after seeing its biggest weekly decline in over four months.
At press time, the cryptocurrency is trading 0.2% higher on the day near $35,838, according to CoinDesk 20 data. Prices fell by 6% in the seven days to Jan. 17, a weekly fall not seen since the first week of September.
Bitcoin took a beating a week ago, falling from $40,000 to $30,305 in a matter of few hours, mainly due to heavy selling in the spot market. The cryptocurrency spent the rest of the week trimming losses and tested $40,000 at one point before ending the week (Sunday, UTC) just under $36,000.
The quick recovery from $30,305 amid the continued accumulation by whales paints a bullish longer-term picture. The options market is also biased bullish, with the Jan. 29 $52,000 call option attracting good demand in the past few days.
However, it may be too early to call an end of the bull market correction, as the cryptocurrency is still trapped in a narrowing price range or triangle pattern on the hourly chart, according to Parick Heusser, head of trading at Swiss-based Crypto Finance AG.
A move above the top end of the triangle pattern would confirm a breakout and imply a continuation of the broader uptrend.
However, as per Heusser, a rally to a fresh all-time high above $41,962 would be more credible evidence of a bull revival. That hinges on the pace of institutional inflows, strategists at JPMorgan said in a note Friday.
“The flow into the Grayscale Bitcoin Trust would likely need to sustain its $100 million per day pace over the coming days and weeks for such a breakout [above $40,000] to occur,” the strategists wrote.
The Grayscale Bitcoin Trust (GBTC), the biggest publicly traded crypto investment trust, reopened last Tuesday after a month-long break. Since then, the trust has accumulated at least 4,700 BTC, according to the Twitter-based GBTC Bitcoin Tracker. If accurate, that’s $171 million-worth of purchases in six days – significantly less than JPMorgan’s required daily average of $100 million.
Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.
Global stock markets are trading on a weak note on Monday, while the U.S. dollar is gaining ground against major currencies. The stronger greenback could hurt bitcoin’s price, as discussed last week.
A potential triangle breakdown could pave the way for a re-test of the last week’s low of $30,305. According to trader and analyst Nick Cote, $28,500 is key support, which, if breached, could invite intense selling pressure.
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