Bitcoin broke through its narrow trading range, recouping this year's losses, raising speculation that the largest cryptocurrency could advance above the $50K level.
The cryptocurrency rose to 47,146 at 5:50 pm in Hong Kong, breaking free from the $35,000-$45,000 range it has been stuck in since early January. With the new rise, Bitcoin's gains since the beginning of this year amounted to 1.4%, compared to a decline of 4.7% for the "Standard & Poor's 500" index.
Bitcoin rebounds and continues to move away from stocks slumped by Ukraine war
Fadi Abul-Ulfa, director of research at Copper, predicted that Bitcoin would face the next resistance level at $52,000, which if it breaks, will target the $65,000 level not far from the November high. Rick Bensignor, president of Bensignor Investment Strategies, said in a note Sunday that Bitcoin is "on the verge of a 20% rally."
The currency remained stuck in a tight trajectory as the Federal Reserve and other central banks removed some of the stimulus measures they had implemented in response to the recession caused by the pandemic, meaning less liquidity is heading to risky assets like cryptocurrencies. Moreover, cryptocurrencies have come under scrutiny as a result of growing speculation that they can be used as a way to circumvent Russian sanctions, although this claim has been refuted by many analysts.
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However, Bitcoin and other cryptocurrencies such as “Ether” started steady progress this month, coinciding with broader gains in US stocks, but did not break the Bitcoin level of $ 45,000, a threshold it has only touched for a short time since early January, until yesterday.
“As we test the top of the 2022 trading range for the fifth time, this is another one of Bitcoin’s moments when the scenario changes rapidly and investors start jostling the market, pushing its price up… and perhaps… It will only be a matter of time before we wake up from the Bitcoin slumber that has characterized 2022.”
Overbought
Despite Bitcoin's recent strength, it has been outperformed over the past few days by altcoins such as Cardano, Solana, Polkadot and Dogecoin. Cardano in particular has been well received by traders, as it has jumped 32% over the past five days, however, these cryptocurrencies remain low in 2022.
Bitcoin has been well above its 50-day moving average, which is currently around $41,085, which puts it in the 80th to 90th percentile range and in the "overbought" range, according to Bespoke Investment Group. This suggests the potential for price pullbacks for many assets, but in the case of Bitcoin, it has historically been the other way around, according to the group.
"When it was at similar peak buying levels in the past (over the past five years), it has averaged significant gains over the next one to 12 months," the Bespoke report stated.
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When Bitcoin was in the ninth tranche of the price margin against its 50-day moving average, it had historically risen 16% the following month, 100% over the next six months, and was gaining 274% a year later, according to data compiled by Bespoke.
Bespoke wrote: “This isn't usually what we see in a traditional stock or ETF, but since Bitcoin has mostly been trading at higher prices over the years and has a lot of trading momentum driving it, the overbought levels haven't yet become a headwind. in this relevant field.
Bitcoin's gains since mid-March - even as the Russian war in Ukraine continues - also cemented its position against gold, its traditional safe-haven competitor, whose prices have been sideways during this period.
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