Bitcoin has been trading north of $5,000 for most of today, building strength above this key, psychological level after experiencing some tumultuous trading days.
The digital currency enjoyed an upward trend for most of the week, reaching roughly $5,450 on April 10 before falling back toward $5,200, CoinDesk price data showed.
The following day, the cryptocurrency dropped below $5,000, reaching as little as $4,894.73, additional CoinDesk figures revealed.
Bitcoin prices have since recovered, breaking through $5,000 and remaining above that level for roughly the last 12 hours.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
When explaining these price fluctuations, analysts pointed to technical analysis and market dynamics.
Members of the SFOX Research Team, for example, emphasized that bitcoin prices have been trending higher for most of this month.
They pointed to the 20,000-BTC order made on April 2, which threw “supply and demand out of equilibrium” and triggered sizable gains.
“This rally was highly publicized in the media, which could have theoretically caused people to experience some ‘FOMO,'” they noted.
“At some point, this cycle ran out of steam (seemingly around $5500, for now), reaching a point at which sellers brought the supply and demand into balance, bringing the most recent price back to a new normalized level around $5000.”
Jon Pearlstone, publisher of the newsletter CryptoPatterns, also weighed in on the digital currency’s price movements, focusing on technical analysis.
He stated that:
“Bitcoin broke out of a bullish pattern above $5000, did not see any meaningful buying follow through around $5400, and has now pulled back to test the current key support level of $5000.”
“This is very typical price action during a bullish cycle,” he emphasized, adding that “price action continues to favor the bullish path even though we’ve pulled back,” with the next “likely target” being $6,000.
However, he emphasized that if the digital currency falls below certain price levels amid strong enough trading activity, it could portend losses.
“A drop under $4750 with increasing volume would be the indicator to watch for that ‘something else may be going on’ versus typical bull cycle moves,” he stated.
Disclosure: I own some bitcoin, bitcoin cash and ether.