According to trader Brian Krogsgard, a period of sideways price action could be healthy for Bitcoin
After rallying above $40,000 and a correction that ended near $30,000, Bitcoin (BTC) has rebounded once again. However, a stall before breaking through the highs near $42,000 could be positive for the asset, according to Brian Krogsgard, a trader and podcaster known on Twitter as LedgerStatus.
„Bitcoin’s correction has been healthy in a strong bullish environment, moving back towards the 20-day moving average,“ Krogsgard explained to Cointelegraph on Thursday. „After the strong recovery, it’s time to find out whether it will continue upwards immediately or stay longer in a prolonged consolidation, which in my view would be healthy.“
On Thursday, Bitcoin barely broke above $40,000 before retreating slightly, reentering the range around $39,000, TradingView.com data indicated.
Breaking above $36,000 was a major move for the asset, according to comments from CryptoWendyO, a trader and analyst on Twitter. „If we don’t regain $36,000 I don’t rule out a further collapse,“ he told Cointelegraph on 12 January, ahead of Bitcoin’s recovery above that level.
New comments from CryptoWendyO express optimism about the price. He recently explained to Cointelegraph:
„Bitcoin has charted a fantastic recovery from my support zone at ~$34,200 after the sharp fall of around 25%. However, I doubt the fundamentals of 2020/2021 will be any different from Bitcoin’s previous history, I currently believe we will continue to rise and I foresee a reversal at $42,000 to mark a similar uptrend to the one following the January 7 correction from ~$34,200 to ~$28,000 to test ~$48,000.“
As for the recent price action, Krogsgard sees a correlation with one of Bitcoin’s products aimed at the mainstream market. „It appears that the closure and reopening of GBTC deposits has had a strong impact on coin demand, as the market reopening has marked a low,“ Krogsgard speculated. „I think we will continue to see institutional demand with each contraction.“
Managed by Grayscale, GBTC is essentially Bitcoin in share form, with each share guaranteed by a fraction of a Bitcoin. In December, the company suspended investments in its Bitcoin Trust, reopening them a few days ago.