Bitcoin shows signs of bottoming out after 9 weeks of losses

Bitcoin shows signs of bottoming out after 9 weeks of losses

The $29,500 mark is an important support for the world's largest cryptocurrency.

Bitcoin (BTC) rose 5.6% in the past 24 hours to surpass $30,000 during Asian trading on Monday in a brief burst of strength amid a record losing streak, data showed.

The asset has fallen for nine straight weeks for the first time in its history, from $48,160 at the end of March to last week's close of $29,600. The decline was accompanied by inflation concerns in the overall economy, a move away from risk assets and systemic risks within the crypto industry.

The price charts suggest that Bitcoin found strong support at the $29,000 level, a level that has been tested several times in recent weeks. A drop below this level could mean that the cryptocurrency could fall to its 2017 high of almost $20,000, the charts show. However, resistance at $30,500 still exists, and a daily close above this level would show strong signs of recovery.

Relative Strength Index (RSI) readings - a tool traders use to calculate the extent of an asset's price movement - have fallen to near 30, indicating a bottoming out. Short-term buyers could add to this week's momentum. Sentiment data from last week already suggest the market could be headed for higher prices in the coming weeks.

Some analysts said investors would continue to wait for price action before deploying capital.

"U.S. markets saw a modest rebound last week, with stocks rising across the board," Simon Peters, market analyst at eToro, said in an email. "Although cryptocurrencies didn't experience quite the same upswing, prices of major cryptocurrencies like Bitcoin have stabilized, suggesting a 'calm' of sorts before major players re-engage in the market."

Monday's rise in prices came as Asian stocks surged on reports that coronavirus restrictions on major Chinese cities have been eased after months of strict lockdowns. Traders were betting that the reopening of the economy could trigger a surge in consumer spending, boosting corporate earnings in the coming weeks and indicating a bottoming out of stocks in the region.

Asia's Dow index rose 2.15% Monday, while Hong Kong's Hang Seng index gained 2.06%. Japan's Nikkei 225 rose 2.19%, and European indexes such as the Stoxx 600 and DAX gained at least 0.82% from Monday's start. Futures in the U.S. rose, with the Nasdaq 100 jumping 1.44%, while the S&P500 gained 1.08%.

However, some analysts say a bitcoin recovery could take longer than expected.

"It would be premature to talk about a bullish counteroffensive until bitcoin rises above $30,600, its horizontal resistance line since mid-May," said Alex Kuptsikevich, senior market analyst at FxPro. "Renewed risk appetite in global markets is fueling hopes of a turnaround."

"The divergence between equity and cryptocurrency momentum was striking last week and underscores the weakness in the crypto market," Kuptsikevich warned.