Key Takeaways
In recent days, Bitcoin has stayed close to its all-time high record due to positive economic trends and the continued strong appetite of investors. A decisive breakout from a flag pattern earlier in the week has paved the way for a new upward climb. Investors are advised to watch for Bitcoin’s key overhead prices at $112,000 and $137,-000, and keep an eye on important support levels at $107,000 and $100,000.
Bitcoin’s Recent Performance
Over the past week, Bitcoin has rallied to near-record highs, mirroring the robust performance of U.S. equities and positive indications about the U.S. economy. On Wednesday morning, the benchmark cryptocurrency reached a high of $110,400, driven by a closely monitored inflation report that suggested consumer prices increased less than anticipated last month. This report is encouraging for investors who are optimistic that the Federal Reserve may reduce its benchmark interest rate this year.
Gained Legitimacy
Once regarded as an outlier in financial assets, cryptocurrencies, including Bitcoin, have gained legitimacy this year, due in large part to the support of President Donald Trump and several allies in Congress. Additionally, the Bitcoin price has been supported by increasing demand from publicly-traded companies such as Strategy that allocate revenue from equity sales to purchase Bitcoin for their corporate treasuries. The surge in total assets of Bitcoin exchange-traded funds to $132 billion this month, up from $91 billion in early April, indicates that institutional interest in the cryptocurrency is growing.
A Benchmark Year for Bitcoin
Bitcoin hit an all-time high of just under $112,000 on May 22nd. Since the beginning of the year, the digital currency has risen about 16%, significantly outperforming major stock indexes. Following a technical analysis of Bitcoin’s chart, several key price levels worth watching have been identified.
Flag Pattern Breakout
Following its all-time high last month, Bitcoin’s price stabilized within a flag, a chart pattern that suggests continuation of the cryptocurrency’s uptrend that started in April. By breaking out above the pattern earlier in the week, Bitcoin has staged a decisive move upwards. Additionally, the relative strength index confirms the bullish price momentum, and there is considerable room for further price increases as the indicator remains below overbought levels.
50-Day Moving Average
In a victory for Bitcoin bulls, the 50-day moving average (MA) crossed above the 200-day MA last month to form a bullish golden cross signal. In light of this, let’s identify the two key overhead areas to watch amid the potential for further buying, and also point out support levels worth monitoring during periods when profits are being taken.
Key Overhead Areas to Monitor
The first overhead area to look out for is around $112,000. This zone near last month’s peak is likely to attract significant scrutiny. A move higher could potentially cause Bitcoin to rally towards $137,000. This target is projected by analyzing the price bars that make up the cryptocurrency’s uptrends before the flag and repositioning them from the pattern’s breakout area.
Observing Important Support Levels
During phases of profit-taking, investors are advised to initially monitor the $107,000 level. A retest of the significant December and January peaks may need to occur before the cryptocurrency makes a meaningful move higher. Lastly, a deeper retracement could see Bitcoin’s price revisit the closely-watched $100,000 level.
The views, opinions, and analyses expressed in this article are for informational purposes only. Always do your own research or consult with a professional before making financial decisions.
The author did not hold any positions in the mentioned securities at the time of publication.
