Wait and Watch? Bitcoin Prices Hover Near Make or Break Level

What's behind bitcoin's recent lethargic price action?

Well, for one, investors appear to be waiting on the sidelines as they seek clarity out of China following news that the country's exchanges will shut down operations by October's end. Traders, it seems, are in no mood to take up big positions, as evidenced by the drop in the volumes.

But, coinciding with this decline has been lack of substance in the bitcoin-U.S. dollar (BTC/USD) exchange rate.

After a rally from the September 15 low of $2,908, bears made their presence felt but were reluctant to push the digital currency back to $3,000 levels. The weak selling pressure helped BTC regain some poise, although gains are now being capped at the key downward sloping trend line hurdle.

Since Friday, the BTC/USD exchange rate has been hovering in the narrow range of $3,600–$3,800. According to the CoinDesk BPI, the cryptocurrency has traded below $4,000 since September 14.

While China could be blamed for the lack of price action, one must not forget that the cryptocurrency rally was overstretched. Thus, a healthy correction and the current pause may be a blessing in disguise.

As per CoinMarketCap, bitcoin has added 2.2 percent in the last 24 hours, trading at $3,775 at press time. Week-on-week, bitcoin is down 7.92 percent and, for the month, the digital currency has lost 13.4 percent.

The price action analysis suggests the cryptocurrency is chipping away at the key trend line resistance, where a violation would open doors for a revisit to $4,200–$4,300 levels.