Bitcoin Bounces Back Above $7,000 Despite Crypto Sentiment Making Sudden Shift – Forbes

Bitcoin and cryptocurrency markets have fallen sharply this week, with more than $20 billion wiped from the combined value of all cryptocurrencies over the last seven days.

The bitcoin price this week dropped below the $7,000 mark to trade at its lowest since May, when rumours surrounding Facebook's planned bitcoin rival sent the price soaring.

[Update 3:20pm EST 12/18/2019] Bitcoin staged a remarkable recovery today after a heavy sell-off earlier in the week, climbing back above the psychological $7,000 per bitcoin mark.

The recovery today comes despite bitcoin and cryptocurrency market sentiment, measured by crypto trading platform SFOX, moving from bullish to neutralsomewhat dashing hopes that bitcoin could be boosted by a so-called Santa rally in the run up to Christmas.

Stock markets often get a boost towards the end of the year by what's known as a Santa rally, with ... [+] bitcoin and crypto markets historically recording some of its biggest bull runs in December.

"Crypto prices have experienced upward movements that correspond with recent holidayspotentially because market participants may expect and try to front-run such holiday fluctuations," SFOX analysts wrote, noting that while bitcoin and crypto prices have dropped over the last few weeks, volatility has also fallen.

The SFOX reading of the bitcoin and crypto market as neutral "may be at least partly due to uncertainty regarding how bitcoin and other crypto-assets may react to upcoming investment product launches, together with holidays such as Christmas and New Years Eve," according to researchers.

Meanwhile, low trading volumes across bitcoin and crypto markets have weighed on trading sentiment for the past few months.

Technical data has also pointed to further declines for bitcoin, with its three-day candle yesterday closing below the 200-period moving averagethought to be a measure of the long-term market trend.

It's the first time the bitcoin price has breached the 200-day moving average since May, with bitcoin and crypto news outlet Coindesk reporting "bitcoin now faces stronger selling pressure."

However, SFOX highlighted the possibility of fresh institutional investment in bitcoin and cryptocurrency which could turn the market tide.

Bitcoin and crypto exchanges are beginning to roll out bitcoin options products, with the Intercontinental Exchange's Bakkt platform recording an all-time high in its open interest on December 16 even as the bitcoin price fell below $7,000.

Elsewhere, Germany has recently passed legislation that will allow the country's banks to custody bitcoin and crypto from the beginning of 2020, which "spells new regulatory clarity."

The bitcoin price has dropped by more than 20% over the last month.

Bitcoin-rivals ethereum, Ripple's XRP, litecoin, bitcoin cash, and EOS have all under performed bitcoin over the last few weeks, with traders and investors increasingly skeptical over the future of some so-called altcoins.

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Bitcoin Bounces Back Above $7,000 Despite Crypto Sentiment Making Sudden Shift - Forbes