Bitcoin Demand at $10K Hints at Move Higher

Persistent demand around the $10,000 mark appears to have not only neutralized the immediate bearish outlook on bitcoin, but also hints the cryptocurrency could be building a base for an eventual move higher. Prices on CoinDesk's Bitcoin Price Index (BPI) fell to $9,972.29 yesterday, before witnessing a quick recovery to $11,000 levels. This is the fourth time in last week that bitcoin (BTC) has recovered losses after sinking below $10,000 levels. As of writing, bitcoin is at $10,990 levels. The cryptocurrency has appreciated by 3.38 percent in the last 24 hours, according to OnChainFX. On Coinbase's GDAX exchange, BTC witnessed two-way business yesterday with prices hitting highs and lows of $$11, 370 and $9,945, respectively, before closing (as per UTC) at $10,824 levels. The situation looks no different today as the rebound from the intraday low of $10,450 seems to have run out of steam above $11,000 levels. The cryptocurrency was last seen changing hands on GDAX at $10,970 levels. The two-way price action witnessed in the last 24 hours is indicative of indecision in the marketplace and a decisive move (in either direction) would likely set the tone for the market. That said, the price chart analysis today puts the odds of a decisive move higher above 50 percent. BTC has consistently found takers at or below $10,000 (marked by circles). On a daily closing basis, bears have been repeatedly failed to push prices below $10,391.02 (50 percent Fibonacci retracement of 2017 low to 2017 high). The previous day's doji candle indicates indecision in the market. Note that the doji candle has appeared following a 44 percent drop from the all-time highs and at critical support ($10,391.02). So it is safer to say that the candle also reflects bearish exhaustion. Hence, BTC may be likely to see a stronger move higher and establish a bullish short-term bias. A positive close (as per UTC) today, preferably above $11,370 (yesterday's doji candle high), would confirm a bullish doji reversal and open doors for $13,000. A violation there would open up upside towards $15,733 (61.8 percent Fibonacci retracement of December high to January low). On the downside, a close (as per UTC) below $10,391 could yield a sustained move lower to $9,000. However, while there are signs of green shoots on bitcoin chart, the market capitalization chart of all cryptocurrencies calls for caution. The market cap chart shows the formation of a head-and-shoulders bearish reversal pattern. A bearish pattern on market cap could be an indication of remaining weakness across the wider cryptocurrency market. Hence, there is merit in being cautious.