Bitcoin Recovers to $40,000

"Bitcoin has received support from buyers when it was hovering around $30,000, however, few could have guessed a day ago events would unfold so quickly. The wave of stop order liquidation dramatically increased the range of movement. But it essentially cleared the way for long-term buyers who were waiting for the overheated market to lift.

It has been a real blitzkrieg, after which Bitcoin is trying to find a new equilibrium, recovering to the levels where it was a day ago. The leading altcoins are still suffering losses of 10-20%. This suggests we are now only seeing buying by large speculators, but not a full return of optimism.

And this caution has its own reasons. The structure of Bitcoin results in the reward given to miners being halved every 4 years, and price upside impulses often coincide with these halvings. Connecting speculators who see explosive growth and gradual adoption of a new asset by the financial world will further increase the price. But there are also long cooling periods.

In 2018 and 2014, a drop below the 50-day moving average triggered a big pullback, all the way to testing the 200-day moving average. The same has happened this 2021 when the currency reached this level. A fairly aggressive rebound followed, but without new highs. The downtrend continued for more than a year afterwards, as participants switched from buying on the decline to selling on the upside."