Bitcoin (BTC) price flashed bullish for a brief moment, possibly tricking some traders into opening longs, before plunging back below $40,000 in evening trading hours. Let’s take a quick look at what traders think about the current price action and whether or not today’s brief break out was nothing more than test of overhead resistance.
Resistance remains at key moving averages
Analysis of Bitcoin’s weekly price action was discussed by crypto trader and pseudonymous Twitter user ‘Rekt Capital’, who posted the following weekly chart noting that “Bitcoin is now hovering below the green 21-week and blue 50-week bull market exponential moving averages (EMA).”
Rekt Capital said,
“Breaks beyond these EMAs have preceded immense upside. Turn these Bull Market EMAs into support and we’ll see Bull Market momentum resume.”
Bitcoin’s correlation to tech stocks provides insight
Despite all the macro factors affecting global financial markets, Bitcoin remains “stuck in the middle of its $35,000 to $45,000 range according to David Lifchitz, managing partner and chief investment officer at ExoAlpha. Lifchitz noted that BTC has behaved more like a risk asset than an inflation hedge.
Evidence for this can be found by looking at the highly correlated price action for BTC and the Nasdaq over the past few months.
According to Lifchitz, if Bitcoin’s “correlation with speculative tech stocks remains high,” the planned series of interest rate hikes by the U.S. Federal Reserve will at some point “become toxic to risk assets” which could translate into declines in the price of Bitcoin.
Overall, Lifchitz suggests that for investors who are convinced of its long-term potential, “Bitcoin should be actively traded while it bounced up and down in the range.”
$42,300 is a crucial level to watch
According to independent market analyst Michaël van de Poppe, $42,300 is the crucial level that needs to be overcome.
Van de Poppe said,
“This is also a daily breaker. If it breaks, I’m assuming a new test of $46,000 is around the corner and possibly $50,000.”
Further evidence that suggests BTC could soon trend higher was provided by analyst and pseudonymous Twitter user ‘Plan C’, who posted the following chart looking at the confluence of several analytical measures for Bitcoin price.
Plan C said,
“The last 4 times the blue & purple lines were below the green line for this long the Bitcoin bottom was already in.”
The overall cryptocurrency market cap now stands at $1.881 trillion and Bitcoin’s dominance rate is 41.2%.
