Bitcoin prices jumped during the European trading session on Monday even though traders assessed the potential of its massive declines against a stronger US dollar.
The flagship cryptocurrency topped at $31,935, up 5 percent ahead of the New York opening bell. Traders flocked back into the BTC/USD markets after the pair breached $30,000-support on Wednesday. The said level has a recent history of accumulation, illustrating that investors find it attractive to purchase Bitcoin around it.
Analysts noted that the $30,000 level’s repetitive testing as support weakened its ability to hold the bears. Some spotted the formation of a so-called Descending Triangle, a technical setup that signals the end of an uptrend. On the other hand, many called any potential breakdown an opportunity to “buy the dips.”
“Many meme triangles out there on Bitcoin, but the fact of the matter is that there continue to be lower highs on the trend,” said Josh Rager, the founder of BlockRoots. “And that the next time price breaks below $30,700s – it likely dips much lower Dips are buying longer term- we have to take this day-by-day.”
A breakdown below the Descending Triangle support can technically send Bitcoin towards $20,000. Source: BTCUSD on TradingView.com
Short-term fundamentals favored bears.
Bitcoin’s rebound from $30,000 came when the US stock market logged its worst one-day performance since October. The benchmark S&P 500 and the tech-savvy Nasdaq Composite each fell 2.6 percent on Tuesday. Meanwhile, their futures on Wednesday signaled additional losses when the New York session opens.
Gold was equally bearish in the last 24 hours, with its spot rates down about 0.13 percent as of 10:30 GMT, owing to a recovery in the US dollar index. A stronger greenback somewhat limited Bitcoin’s ability to log additional gains on Thursday.
Bitcoin Bullish Setup
In his statement to the Wall Street Journal, Aegon Asset Management’s CEO Olaf van den Heuvel noted that investors are putting their money-off the table, fearing that a slow rollout of COVID-19 vaccines and lockdowns in some developed economies would hurt inflated assets.
He also stated that dips will present investors the chance to buy risky assets when the markets settle down.
Bitcoin bulls see the long-term outlook in a similar way. On-chain analyst Willy Woo stated earlier this week that institutional investors will lose money if they sell their Bitcoin holdings below $30,000. Therefore, it is in their interest to keep the cryptocurrency steady above the said level.
“The sales volume comes from new investors who have recently entered the rally,” he noted, adding that Bitcoin is at the beginning of a fresh bull market.
US dollar index recovers from technically oversold areas. Source: DXY on TradingView.com
More bullish calls come from traders who see the Federal Reserve’s expansionary policy as one-stop shop for a wild upside run in the Bitcoin market. The US central bank stated on Wednesday that it would keep purchasing bonds worth $120 billion every month and maintain lending rates near zero.
“Debt monetization isn’t good for the US dollar,” said Nick, the founder of Ecoinometrics, a crypto newsletter. “Technically speaking it is money debasement. So anyone worried about preserving their wealth will want to put their cash in a store of value.”
Bulls believe Bitcoin could hit $100,000 by the end of 2021.