Analysts say the price of bitcoin may have hit its lowest point and the foremost cryptocurrency is now most certainly on the mend.
Despite the threat of a looming trade war keeping equities on the back foot, bitcoin made a comeback on Thursday as prices climbed significantly following this week’s losses on the market.
“When we step back, we see the first phase starting to happen. We think Bitcoin is starting to bottom off some very key support around $7,000 and we think it’s going to start a recovery process here,” Robert Sluymer, head of technical strategy at Fundstrat Global Advisors, told CNBC’s on Thursday.
A recovery from $7,270 to $7,570 has established a bullish pattern, which adds credence to Tuesday’s bullish outside-day candle and bullish price-relative strength index (RSI) divergence. Prices moved as low as $7,054 this week before bouncing higher.
Bitcoin has touched its key support level of around $7,000 several times in 2018 only to recover each time.
Sluymer describes it as the first sign of the bottoming process, “That’s certainly the first step in a bottoming process – to see some sort of consolidation or a basing taking hold.
“That RSI indicator in the bottom of the chart is very oversold and starting to bottom so that’s really part of that bottoming phase taking hold.”
Analysts say Bitcoin could rise to $7,800 (descending trendline hurdle) within the next 24 hours. A high-volume break above that level would allow a re-test of the 50-day moving average, currently located at $8,522. The cryptocurrency moved 2 percent on Thursday, trading at $7,558.
“The next thing that has to happen is to see Bitcoin actually rally through the downtrend and we use the 15-day moving average, it’s very simplistic, but it’s a pretty good proxy across most markets,” said Sluymer, adding that its 15-day moving average of roughly $7,800 will be the next hurdle for it to get through.
“We think the setup is very attractive here. If you’re short we think you should be very careful and reducing your short exposure. I think if you’re looking to be long this is where you start adding here to your long exposure,” he said.
Bitcoin last traded around the $7,800 level a week ago. It has not traded above it since May 23.