Bitcoin prices breached $1,000 for the first time in nearly one month today.
The price saw initial fluctuations around that level before climbing higher, hitting a high of over $1,009 before settling around $1,007 at press time, according to the CoinDesk Bitcoin Price Index (BPI).
Yet to analysts, the development raises the question of whether markets will see continued action above the $1,000 mark, and some say the digital currency may need to work its way through significant resistance before it is able to find support at that level.
Petar Zivkovski, COO of leveraged bitcoin trading platform Whaleclub, told CoinDesk:
“The $1,000 level is a huge level to breach sustainably.”
The desire among traders to book profits could also be a major factor in the trading sessions ahead. Some may feel compelled motivation to sell at price points between $1,000 and $1,200, leading the digital currency to face an uphill fight at these levels, Zivkovski posited.
The digital currency first broke through $1,000 today at 16:30 UTC, just barely surpassing this level when it reached a high of $1,000.31.
However, bitcoin prices quickly changed direction, falling below $1,000 to reach a low of $999.01 at 17:45 UTC, additional BPI figures show. The cryptocurrency proceeded to fluctuate around the $1,000 level, rising to $1,000.85 by 18:00 UTC and then falling to a low of $999.84 at 18:15 UTC.
But while $1,000-level may be enough to generate significant visibility in the Western world, the ¥7,000 level is just as critical, according to analyst Tim Enneking.
At the time of report, bitcoin had failed to exceed this level during the 2nd February session, having risen to as much as ¥6,976.50 earlier in the day.
Enneking elaborated on the key relationship between the $1,000 and ¥7,000 levels, telling CoinDesk:
“If it breaks through both and holds, they will turn into very strong support!”
Overcoming negative sentiment
According to some observers, the price could encounter headwinds from negative sentiment that still lingers following the cryptocurrency’s sharp price movements this year – which saw bitcoin rise above $1,150 and then fall close to $200 in an hour.
Arthur Hayes, co-founder and CEO of leveraged bitcoin trading platform BitMEX, attributed this sentiment to the People’s Bank of China (PBoC) decision to closely scrutinize the domestic bitcoin exchange ecosystem.
That said, Hayes did offer a positive view of the situation.
“The market is slowly shedding the fear of drastic action take by the PBoC against Chinese Bitcoin exchanges,” he told CoinDesk. “As this fear fades, the price will slowly retrace towards to the all time high reached in early January.”
Market data, according to sources, bears out that sense of cautious positivity.
Whaleclub sentiment data shows that the market was 89% long torday, representing the third consecutive trading session during which this measure was at least 80%.
In addition, confidence – the extent by which a position size is larger than average – was 82% on 2nd February, after measuring 85% during the prior two sessions.
Colorful bubbles image via Shutterstock