The current surge in Bitcoin’s price comes after reports that international investment bank, Morgan Stanley, is considering introducing spot cryptocurrency trading to its E*Trade platform sometime in the next year. This news, coupled with the announcement that the world’s largest corporate holder of Bitcoin, a company named Strategy, is planning to acquire more Bitcoin through a $21 billion equity offering, significantly boosted sentiment among cryptocurrency investors.
Bitcoin has increased by roughly 30% from a low in early April. Investors are increasingly considering diversification of their portfolios as a response to the increasing uncertainty around the United States’ administrations trade policies, and the potential impact on the economy. In the recent market turbulence, Bitcoin has occasionally shown contrary movement to stocks, indicated to some investors that the cryptocurrency is beginning to demonstrate its value as a safe haven.
The cryptocurrency was trading at around $97,000 recently, still below its record high of around $109,000 in January but significantly up from last month’s low of just under $75,000. Now, let’s examine the chart of Bitcoin using technical analysis tools to identify key price levels to watch.
Breakout from the Pennant Pattern
Bitcoin managed to break away from a descending channel last month and rallied impressively before consolidating in a narrow pennant pattern. This breakout has set the stage for a continuation of upward momentum. The relative strength index supports this bullish price momentum, even as it edges towards overbought territory. Nonetheless, it’s important to note that trading volumes remain below average, suggesting larger market participants may be sitting on the sidelines.
Crucial Overhead Areas to Watch
The first crucial overhead area to watch is $100,000. This price level is likely to provide resistance due to its proximity to previous trading activity. A more bullish move could see the price of Bitcoin test resistance around $107,000, near the swing highs of December and January. This region aligns with a projected upside target from the pennant pattern breakout.
Key Support Levels Worth Eyeing
During potential pullbacks, investors should first look at the $92,000 level. This level matches the low point of the pennant pattern and aligns with several peaks and troughs on the chart going back to last November. In case of more severe breakdowns, a drop to $85,000 should be expected. Investors may view this price level as an entry point, as it aligns with February’s low and a period of sideways movement preceding last month’s breakout from the descending channel.
In summary, both investors and traders need to be mindful of these crucial price points as Bitcoin navigates its way through fluctuating market conditions. By understanding these support and resistance levels, they can establish more informed views about potential investment and trading strategies.
Note: The insights shared above are for informational purposes only and should not be treated as investment advice. Always conduct thorough research before making any significant investment decisions and read the disclaimer for the relevant platform.
