The crypto world watches with bated breath as BTC continues to hover around $68,000 to the dollar, below its all-time US high of $69,000.
Invezz spoke to Rania Gule Market Analyst at XS.com on what will likely happen next. Edited excerpts:
How likely is Bitcoin to reach or surpass $69,000 this week?
The new rise [to] the highest level since November 2021, confirms the strength of the upward trend, despite negative technical signals indicating the price reaching overbought conditions.
After breaking above the April 2021 level at $64,821, the price will inevitably target the higher record level of November 2021 at $68,911.
From this level, the price may encounter some resistance and correction downwards, albeit modestly. However, in the case of a strong breakthrough, the price is expected to target levels of $70,000 during the current and next week, in my estimation.
However, if the price returns to test the strong support at $60,000, it may bounce upwards, potentially breaking through and reaching levels as low as $42,000 or $37,000 before resuming an upward trajectory and retesting it once again.
What, in terms of technical analysis, leads you to believe this?
From a technical standpoint, the price of Bitcoin has been on the rise since the appearance of the bullish golden crossover signal on the weekly chart in late December of the previous year.
The upward momentum has propelled the price to reach $69,000, recorded in November 2021. While this level may offer resistance in the short term, it could also become a new support area if successfully breached.
However, momentum indicators such as the Relative Strength Index (RSI), Stochastic, and MACD suggest that the price has entered the overbought zone, increasing the risk of a technical correction to the downside at any time.
And are there any fundamental analysis aspects to keep in mind?
Fundamentally, the recently launched Bitcoin exchange-traded funds (ETFs), which began trading on January 11th, after obtaining regulatory approval from the Securities and Exchange Commission (SEC), have contributed to a 50% gain in Bitcoin since the beginning of the year. These ETFs injected significant liquidity and new institutional funds into the market.
Since their debut in January until the end of last month, exchange-traded Bitcoin funds witnessed net inflows exceeding $10 billion, signalling increased investor confidence in the upward trajectory of prices.
Looking ahead, investor attention has shifted to the upcoming Bitcoin halving event in April, occurring every four years, reducing mining rewards by 50% to verify transactions on the Bitcoin blockchain.
Typically, halving events are considered bullish catalysts as they decrease the rate of new Bitcoin creation, contributing to the scarcity of the asset.
Similar to other high-risk assets, Bitcoin continues to benefit from expectations that the Federal Reserve will begin cutting interest rates later this year, yet it remains susceptible to increasing volatility amid a backdrop of contrasting economic conditions.
So, you think it will meet resistance and dip at the point of reaching its all time high price?
While history may not always repeat itself, it often rhymes. I believe there is still an opportunity for the current upward trend to form a short-term correction, potentially reaching around $53,000.
A breach of this level could lead to targeting $42,235, the midpoint of the previous bearish market channel.
Even though it may seem unlikely, caution must be exercised regarding a breakthrough, which could lead to targeting the demand zone between $40,000 and $37,000, then the next major support level at $32,293 in the worst-case scenario.
From my perspective, we cannot rule out the possibility of a correction at any time, reaching the major support zone between $52,000 and $53,000, then returning to levels around $60,000 before attempting to retest the all-time high at $69,000.
And then what happens?
Beyond this level, Bitcoin will enter a price discovery phase, where price movement will be free from technical constraints and will entirely depend on fundamental drivers such as investor sentiment, capital flows, liquidity, and others.
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