(Kitco News) - The crypto market showed signs of resiliency on Wednesday as early morning declines reversed near midday to bring prices back to par with where they started the day.
A similar recovery was witnessed in the stock market, which was under pressure during the morning session but managed to claw its way into the green near the market close as Wall Street looked to extend gains into a third day.
Data provided by TradingView shows that Bitcoin's (BTC) price plunged to a daily low of $19,755 in early trading on Wednesday but managed to reverse course in the afternoon session and climb back above $20,000 where bulls are now battling bears for control.
BTC/USD 4-hour chart. Source: TradingView
The weakness in BTC was touched on by Kitco senior technical analyst Jim Wyckoff in his morning Bitcoin brief, noting that “bulls had gained some slight momentum earlier this week, but lost much of it Wednesday.”
If bulls can manage to push for more price gains in the near term, they have the potential to “start a price uptrend on the daily chart,” Wyckoff suggested, before cautioning that they “have more work to do in the near-term to suggest a price uptrend can be sustained.”
One possible scenario of how such an uptrend might look was provided by pseudonymous Twitter user Moustache, who posted the following tweet showing a potential correlation with a BTC price move back in 2018.
$BTC
— ????????????????? ?? (@el_crypto_prof) October 5, 2022
2018 #Bitcoin: MACD changed color from dark red to light red. This ended the bear market and an incredible rally took place.
2022 #Bitcoin: MACD changes color from dark red to light red. This could be the end of the bear market.
Incredible rally next? Be prepared. pic.twitter.com/TkfoY55KWG
No end in sight for the crypto winter
Not all analysts paint such a rosy picture moving forward, including Florian Grummes, managing director of Midas Touch Consulting, who called the price action since June a “three-month sideways torture,” and warned that “another breakout to the downside seems to be only a matter of time.”
Grummes highlighted the major support level around $18,000 as one to watch and suggested that “prices are likely to stay within the tightening Bollinger Bands” between $16,000 and $28,000.
The prevailing trend on the weekly chart “clearly remains to the downside,” according to Grummes, who cautioned against a short squeeze “given the oversold situation.”
For those hoping that this latest rally could bring about an end to the crypto winter, the analyst warned that such a development “is not in sight and Bitcoin is likely to see new lows in the medium term despite any intermediate recoveries and countertrend rallies.”
The U.S. dollar was highlighted as the main driver of uncertainty and weakness across financial markets.
“As long as the greenback remains strong and trending higher, the liquidity crisis will continue and all asset classes will remain under pressure,” Grummes said.
“Should the bears be able to prevail, prices will likely correct further towards 14,000 USD and 10,000 USD. Our worst-case scenario remains 6,000 USD in the medium term. However, we suspect that there will be a sharp recovery rally in all markets. It might have started already or will start somewhere between mid and end of October. This will postpone the final sell-off until next year.”
Markets update
Overall, the altcoin market trended down on Wednesday afternoon as traders found little motivation to engage with the market.
Daily cryptocurrency market performance. Source: Coin360
The biggest gainers on the day include a 17.83% increase for Numeraire (NMR), an 11.06% gain for Smooth Love Potion (SLP), and a 7.3% gain for Helium (HNT).
In the traditional markets, the S&P, Dow and Nasdaq all made a push higher in the closing hour but eventually closed in the red, down 0.20%, 0.14% and 0.25%, respectively.
The overall cryptocurrency market cap now stands at $963 billion, and Bitcoin’s dominance rate is 40.1%.
