TL;DR squeezed between a ceiling at $4,200 and an upward-sloping support line, bitcoin’s days in this range are limited.
Sunday saw some exciting action. Bitcoin had already taken two significant legs higher, pushing up from its local low around $3,330 earlier in the month to the $3,600s, consolidating a little before another move last Sunday into the $3,700s. Then we saw that final big move up two days ago, smashing through $4k before hitting that resistance zone at $4,100–$4,200. For a moment it looked as if bitcoin was going to make its first higher high in 14 months, but it was not to be.
Instead, it proved to be a fakeout, and a huge fall saw BTC take out the last support level and drop to $3,700, stopped only by the 100-day moving average it had so recently crossed. We are now at a crossroads. Bitcoin is clearly struggling to break that resistance at $4,200, where it needs to consolidate after a move up. At the same time, BTC has been making higher lows this year, and the upward-sloping support line they describe broadly coincides with that all-important 200 WMA at around $3,300.
Very soon, we must hit decision time. Either we will burst through $4,200 – in which case, another leg up is to be expected, to $4,400, $4,600 or potentially even as high as $5,000. Or that level will be rejected, and the ensuing fall will see the support line at $3,300 retested. If it is breached, we could see some very volatile conditions – starting with that epic move to the downside, below $3k and quite possibly down into the mid–$2,000s.
Whatever the technicals, the long-term fundamentals are good for bitcoin. In the last week we have seen Elon Musk come out in favour of bitcoin, adding his voice to the likes of other tech industry giants such as Jack Dorsey and Tim Draper. Also interestingly, Cambridge Associates – a global investment firm that works with institutions and wealthy private investors – have recommended that institutional investors start actively exploring crypto and allocating a percentage of their portfolios to this new asset class.
Lastly, Coinbase has added XRP – finally, to the joy of the Ripple community, who are some of the most committed fanboys in the crypto space. It may come as a shocking surprise that XRP showed significant movement higher in the hours before the announcement. Coinbase has been accused of insider trading before but found not guilty. We’ll see if the same applies this time.
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