Bitcoin’s trading around $9,000 once again but technical indicators show it may have gone up too far, too fast.
Based on the GTI Vera Band Indicator, which tracks upward and downward trends, Bitcoin’s last price is far above the upper-band limit, signaling the coin is in an positive trend. However, similar instances in the past — including twice so far this month — have led to a mean reversion, which could push the coin back to the $8,500 level.
This week, Bitcoin rose to its highest level since early November, reaching as high as $9,182. Since Friday, its gained more than 7%. Some analysts and crypto enthusiasts suggest the digital currency has benefited as a safe-haven play amid ongoing concern over the spread of the Wuhan virus, which has killed more than 100 people. Anxiety over the spread of the virus on Monday saw the S&P 500 post its worst decline in nearly four months.
“The Bitcoin bid, fueled by declining equity prices amid coronavirus concerns, is indicative of crypto’s growing acceptance as a risk-off diversifier,” Mike McGlone, an analyst with Bloomberg Intelligence, wrote in a note Tuesday. “If the stock market has a more enduring decline, Bitcoin is poised to be a prime beneficiary.”
Bitcoin extended its rally on Tuesday, rising as much as 2.7% to trade at $9,182 in New York. Peer coins, including XRP and Bitcoin Cash, each gained more than 2%, while the Bloomberg Galaxy Crypto Index rose 2.2%.