TL;DR Onwards and upwards!
Bitcoin has been stuck in a short-term bearish phase for the last month, since topping out at $13,880. That may have finally changed yesterday when BTC broke above key resistance.
Over the past few weeks we have seen a succession of lower highs, with the last around $10,200. Bitcoin put in a higher low – just – on Sunday, when it held the $9k level. Now, it has put in a higher high and followed through. At the time of writing, BTC has touched a recent high of $10,584 before pulling back.
Volumes aren’t as high as we’d like to see just yet, so we’ll be keeping an eye on those in case this is a fake-out – in which case, it’s reasonable to expect a lower low to be incoming, down below $9k.
For now, bitcoin is trading well above the 21-day EMA. It found resistance at the 50-day MA, which it will need to break soon to maintain momentum. RSI on the daily is just above 50 and heading up, while on the 4h it is well into the overbought zone, suggesting that BTC may need to consolidate or correct a little here before its next leg up.
Overall, the picture is good. July was the first month since January that closed in the red – again, a necessary move in any sustained uptrend. Assuming this correction phase has lasted 5-6 weeks and the price of BTC dropped a maximum of 35% ($13,880 down to $9,050), that would be entirely in line with other early bull market corrections, notably in November 2015 and June 2016, both of which were around a 40% drop.
For a little more bullish context, we’ve seen the following this week:
- Transactions on the Bitcoin network are on track to reach an all-time high this year
- 85% of all BTC have now been mined, with coin number 17,850,000 being mined yesterday.
- A new indicator from Willy Woo, the Bitcoin Difficulty Ribbon, suggests the bull run is just starting (more on this tomorrow).
However, it turns out that – despite being widely reported – LedgerX has not started offering physically-backed bitcoin futures. The Commodities Futures Trading Commission (CTFC) chief communications officer Michael Short, even took the step of emailing CoinDesk to clarify, ‘LedgerX has not yet been approved by the Commission.’
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