Bitcoin crawled back to the $11,000 level after struggling for direction on pulling back from a one-year high of $12,400 in August. However, the flagship cryptocurrency is struggling to hold on to gains above the $11,000 handle as a resurgent dollar continues to curtail any upside gains.
Bitcoin Pull Back
Fuelling doubts of further upside action is the fact that traders’ sentiments on the flagship cryptocurrency is at an all-time low. Social media sentiment has plunged to two-year lows in recent weeks, a development that continues to curtail a bounce back to one-year highs.
Trader’s sentiments appear to have plunged on the crypto, failing to hold on to gains above the $12,000 level. The crypto had powered to record highs in August as uncertainty amid the COVID-19 pandemic forced investors into safe-havens.
Bitcoin had been powering high as investors scampered for safety in safe-haven such as gold. The same fate that has befallen Bitcoin has also befallen gold. The precious metal has struggled to bounce back to above the $20,000 an ounce level.
Bitcoin has since pulled lower to the $10,880 level after touching two-week highs of $11,092 on Wednesday. The crypto did face some rejection, conversely edging lower as trader’s sentiments remained low. Analysts remain wary of the crypto finding support above the $11,000 level in the short term. It would even take much longer to bounce back to August highs of $12,000.
While the $11,000 handle has emerged as a critical resistance level, the crypto faces strong support at the $10,700 level, followed by $10,525, then $10,350.
Bitcoin Long Term Outlook
Amid the recent pullback, Bitcoin remains bullish, trading above key technical indicators such as the 200-day moving average. However, it has struggled to break its prolonged sideways movement opting to oscillate between $10,300 and $10,800
Amid the consolidation, Blockroots compliance Blockchain company founder Josh Ragger believes the crypto will resume its upward trend due to its use as a hedge against inflating fiat currencies. With the global economy facing its biggest contraction in recent history, inflation is expected to tick higher, something that could force investors to turn to alternative investment in the form of Bitcoin.
Bitcoin has emerged as a reliable hedge against inflation and risk in the mainstream financial sector. Institutional investors have been ramping up investments in the flagship cryptocurrency thanks to an increase in a number of products designed to provide exposure to the digital currency.
The upcoming U.S election presents a risk that should see the crypto elicit strong interest likely to drive prices higher. The uncertainty around the hotly contested election should see investors shunning risky assets in favor of safe-haven such as gold and Bitcoin.
However, standing in the way of gold powering high in the short term is a resurgent dollar. The dollar has been picking up steam in recent weeks, strengthening against a basket of other majors. A strengthened dollar should continue to pile pressure on Bitcoin, conversely curtail upside action. Bitcoin had initially raced to one-year highs as the dollar weakened to two-year lows.