Bitcoin shows signs of recovery after nine weeks of losses

Bitcoin shows signs of recovery after nine weeks of losses

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

Bitcoin (BTC) has risen 5.6 percent in the past 24 hours to reach more than $30,000 during Asian trading on Monday, a brief bounce amid a record losing streak, data show.

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

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Price charts indicate that bitcoin found strong support at the $29,000 level, a level that has been tested several times in recent weeks. The data shows that a drop below this level could see the cryptocurrency fall to its 2017 high of almost $20,000. However, resistance remains at $30,500, and a daily close above this level could be a clear sign of a recovery.

Relative Strength Index (RSI) readings - a tool traders use to calculate the extent of an asset's price movement - have fallen to nearly 30, suggesting bitcoin has bottomed out. Short-term buyers could build on this week's momentum. Sentiment data from last week already suggests that the market could be headed for higher prices in the coming weeks.

Some analysts believe investors will continue to weigh price trends before deploying capital.

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

Monday's price surge follows a slump in Asian stock markets after reports that major Chinese cities eased restrictions on the corona virus after months of strict restrictions. Traders are betting that the rebound in the economy could trigger a surge in consumer spending, boosting corporate profits in the coming weeks and providing a floor for stocks in the region.

Asia's Dow index rose 2.15 percent Monday, while Hong Kong's Hang Seng index added 2.06 percent. Japan's Nikkei 225 rose 2.19 percent, and European indexes such as the Stoxx 600 and DAX gained at least 0.82 percent from Monday. U.S. futures rose, with the Nasdaq 100 up 1.4 percent and the S&P500 up 1.08 percent.

However, some analysts believe bitcoin's recovery could take longer than expected.

"It would be premature to talk about a counter-offensive by the bulls until bitcoin breaks above $30,600, its horizontal resistance line since mid-May," said Alex Kuptsikevich, senior market analyst at FxPro. "The resurgence of risk appetite in global markets is fueling hopes for a turnaround.

"The divergence in the dynamics of equities and cryptocurrencies was noticeable last week and underscores the weakness in the cryptocurrency market," Kuptsikevich warned.

This article was translated by Marina Lammertyn.