Bitcoin bounces but gains could be limited

iStockphoto / MarketWatch photo illustration

After a two-day selloff, major cryptocurrencies have seen moderate gains Friday as they look to claw back losses in what’s been a tumultuous week for crypto investors.

The 48-hour slide saw the No. 1 digital currency, bitcoin

BTCUSD, +5.04%

 lose as much as $2,000, trading below $9,600 late Thursday. This morning, bitcoin has regained a level around $10,000, trading up 3.7% at $10,197.42.

Despite the bounce, price action remains subdued, with each rally met with selling pressure, market participants said. “Even though I think BTC’s worst days are still ahead of us, we are in the eye of the storm and prices will stabilize over the near-term. But since lower-lows are still ahead of us, any rallies should be sold, not chased,” Jani Ziedins of Cracked.Market said.

For bitcoin, the next level on the top side is the $11,000 to $11,500, which sees the top of a trend line channel from the all-time high and the 50-day moving average, currently at $11,091. Market technicians tend to look at moving averages to gauge an asset bullish or bearish momentum.

Other major cryptocurrencies have followed bitcoin in clawing back some losses. Ether has gained 7.7%, trading at $877.81, Bitcoin cash is up 5% at $1,286.18, Litecoin is back above $200, trading at $211.46, up 7.9% and Ripple has risen back through $1 to $1.02, up 7.9%.

However, despite the rally, the danger remains on the downside. “We think this may be another pullback however the break of this month’s low could change the game,” Naeem Aslam, Chief Market Analyst at Think Markets said.

Futures markets have followed cash markets higher. The Cboe Global Market’s March

XBTH8, +2.55%

is up 1.6% at $10,160 and the CME Group Inc. February contract

BTCG8, +2.23%

 is higher by 0.9% at $10,140. The CME’s February contract expires on Friday, with the front-month March contract

BTCH8, +1.78%

 up 1.8% at $10,260.

On the contrary, the recent volatility could me much ado about nothing.

“In a market with so much price manipulation and asymmetrical information, it is sometimes hard to see the real reasons behind these market moves,” Aslam said.

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