Bitcoin has regained some ground on Wednesday, though it is still hovering below a critical level of $7,000. The first digital asset has gained 1.6% since the start of the day and over 2% on a day-to-day basis. Despite the recovery, Bitcoin is moving within the short-term bearish trend, which means we may see more sell-off before another bullish leg. 

According to Intotheblock data, over 52% of Bitcoin addresses are in the money now. A cluster of 1.65 million addresses with nearly 830k BTC are waiting for the price to enter $7,050-$7,375 range as this development will bring them to a break-even point. The number of large transactions has decreased slightly together with the volume of such transactions, while stayed at 56.28% from the historical high 139.65 hit on April 6.

1. BTC/USD: Technical picture

On the intraday chart, BTC/USD recovery is limited by 1-hour SMA200 located on the approach to $7,000. Once this psychological barrier is out of the way, the recovery may be extended toward the next important resistance created by 50% Fibo retracement for the downside move from February 2020 high.  A sustainable move above this area will open up the way to $7,500. This level stopped the recovery at the beginning of April.

On the downside, the local support is created by daily SMA50 at $6,800. BTC remains bullish bias as long as it stays above this level. If it is broken, the sell-off may continue towards $6,600-$6,500. This area served as a good backstop during the previous downside correction. It includes the lows of April 13 and 16 as well as 38.2%  Fibo retracement for the downside move from February 2020 high.

BTC/USD daily chart

BTC/USD daily chart

2. Bitcoin won’t go negative

Cryptocurrency investors and traders touted Bitcoin’s stability in the face of a major oil price collapse. However, the hardcore Bitcoin critic, Peter Schiff was fast to disillusion them. He agreed that Bitcoin would not drop below zero, but added that it was still a bad investment option.

Bitcoin bugs claim that oil’s plunge into negative territory validates Bitcoin as an asset class, as despite its high volatility and big drops, its price never fell below zero. I agree that the downside risk in #Bitcoin is limited to 100%. Not exactly a compelling reason to buy!

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