- Wednesday's indecisive "spinning top" candle has neutralized the short-term bullish view. The cryptocurrency remains at the mercy of the sentiment in the traditional markets in the short term.
- A rising channel breakdown on the four-hour chart would bring deeper losses toward $6,000. That may happen if the risk-off tone in the equity markets worsens on the back of dismal U.S. economic data.
- A move above $7,000 is needed to restore the immediate bullish bias.
The bitcoin (BTC) market is looking pensive as global equities fail to respond positively to the U.S. Senate's approval of a massive coronavirus stimulus package.
The top cryptocurrency by market value is currently trading around $6,650, having witnessed two-way business in $6,500-$7,000 range in the last 24 hours, according to CoinDesk's Bitcoin Price Index.
Meanwhile, futures tied to the S&P 500 are down nearly 1 percent at press time, and major equity indices in Europe like Germany's DAX and U.K.'s FTSE 100 have shed 1 percent – possibly taking cues from the Asian equities, which put in a negative performance.
Markets still look risk averse, even though globally a number of monetary and fiscal lifelines have been extended to stem the economic fallout from the coronavirus outbreak.
The biggest of the lot is the $2 trillion coronavirus package approved by the U.S. Senate early on Thursday. The legislative package includes $500 billion for U.S. companies, $350 billion for small businesses, $250 billion in federal unemployment benefits and $300 billion in direct payments to most U.S. citizens.
"There is a growing consensus within the community that due to the Fed announcing unlimited QE, investors could soon be looking to BTC as an inflation hedge against a depreciating dollar. Coupled with the upcoming halving, we could see some really positive moves over the medium to long term," Nemo Qin, an analyst at eToro, told CoinDesk.
Qin expects prices to retest $7,000 again and break higher convincingly. So far, however, buyers have been trading cautiously.
The U.S. Department of Labor is scheduled to publish the initial jobless claims for the week ended March 20 at 12:30 UTC today. Jobless claims are forecast to rise sharply to one million from the preceding week's 281,000. Risk aversion could worsen if these numbers turn out significantly higher than expected, in which case bitcoin could come under pressure, too.
"For bitcoin, the downside risk is another aggressive sell-off across all markets due to coronavirus," Chris Thomas, head of digital assets at Swissquote Bank, told CoinDesk.
From a technical perspective, bitcoin's recovery rally looks to have stalled and prices could suffer if support at $6,460 is breached.
Bitcoin created a spinning-top candle Wednesday. These occur when prices swing both ways, but close the day with moderate gains or losses. The long wicks and the small body are reflective of indecision in the market place.
See also: Bitcoin Halving, Explained
In this case, however, the candle has appeared following a notable rise from a low of $3,867 on March 13 to $7,000 and represents bull fatigue.
As a result, the short-term bullish bias stands neutralized.
Bitcoin remains trapped in an ascending channel. A break below the lower end, currently at $6,476, would imply an end of the rally from recent lows under $4,000 and shift risk in favor of a drop to $6,000.
On the higher side, a convincing move above $7,000 is needed to revive the bullish case and open the doors to stronger gains toward $7,500.
Disclosure: The author currently holds no cryptocurrency assets.
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