Really? Is Crypto back? Over the last two months for some unknown reason Bitcoin has been gaining momentum and has broken through the psychological $6000 level.
The mother of all Cryptocurrencies Bitcoin is currently up over 150% from its December 2018 low and the Alt coins are following suite. Some of the Alt Coins have gained even more traction like Ethereum surpassing 180% from its December 2018 low.
Source – CME Group
There is no clear reason as to why Bitcoin is starting to rise, but trying to make sense of it all we might use the following rational:
Technical Analysis – looking at market psychology and behavioural finance we might say that certain technical price levels (psychological levels) might be of importance like the $6000, $8300 and $10000 per coin levels. These price levels are all support and resistance levels of significance as the price moves higher once more.
The price action of Bitcoin is currently trading above its major Simple Moving Averages and the start of a Golden Cross is also visible which supports the price moving higher.
Haven – in current market conditions we might also use the rational that investors are using Bitcoin and other Cryptocurrencies as “Safe Havens” over Gold and Cash. I use the term “Safe Haven” very loosely as reports from as early as last week stated that around 7000 Bitcoin worth $40 Million were stolen by Hackers from one of the world’s largest Crypto exchanges, Binance.
Adoption – some of the biggest hurdles for Cryptocurrency is the wide adoption for everyday use and not to mention the legal and regulatory aspect of it all. Efforts to list Crypto assets on major exchanges failed due to regulatory concerns. Some headway was made when Bitcoin Futures contracts listed on the CME Groups exchange to speculate on the price movements of Bitcoin.
The Bitcoin chart:
Technical Analysis on Bitcoin:
Looking at the below chart of bitcoin we can see that psychological $8300 level acting as major overhead resistance. The price must break through this level and close above to indicate that the bulls are in charge and the upward momentum can continue.
The Relative Strength Index (RSI) is currently overbought which might indicate a short-term reversal before the price pushes higher once more.
Also supporting the move higher are the major Simple Moving Averages pointing higher and the potential start of the Golden Cross formation highlighted below.
Source – Bloomberg
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