Bitcoin has mounted a strong rally over the last week and will look to build on that in the coming weeks.
This article will look at the key trading levels and the reasons for the rally.
Bitcoin – 4H Chart
The BIG support for BTC is the $20k level which was the 2017 high. It was vital to get above that, but will it hold? If it does, trading the long bias to $25,250 is possible. The $29,000 level would be another strong resistance.
The good news for Bitcoin was that US inflation softened again, hinting that the Federal Reserve could slow the pace of its rate hikes. High government bond yields have made the yields of crypto finance projects less appealing. The US dollar also fell due to the inflation data, which has weighed on commodity prices in recent months.
The latest bankruptcy hearing of the FTX exchange provided good news as the company’s auditors announced that they found $5bn of funds. This was up from an earlier $11bn estimate in December and gives hope that creditors can be repaid and further bankruptcies avoided.
Bitcoin’s rally was exacerbated by a short squeeze at resistance around the $20,000 level.
The not-so-good news for Bitcoin is that US inflation is still high, and the Fed will keep rates “higher for longer.” That means capital stays in bonds and will not suddenly move to crypto assets. The only way that changes in the short-term is with a recession or global event, which would hit risk assets and add strength to the dollar.
The crypto atmosphere is still a bit negative, and we will see a gradual change in institutional investment after the recent failures. The other elephant in the room is in regulation. The SEC’s move against Gemini and Genesis with charges of selling unregistered securities shows a desire by regulators to squeeze the weak players and try to cause more turmoil. There could also be manipulation involved to pump up the assets of FTX. The shorts have been squeezed, and now we have to watch trading levels and market events this week.
