Region is “old ghost” that Bitcoin needs to face in order to rise further
It’s been three long months since the last time Bitcoin went to the $ 10,000 mark. Since then, a lot of speculation and volatility have been around the main cryptocurrency.
The last time Bitcoin had reached $ 10,000 was on October 26, 2019, three and a half months ago. The day before, the asset had started an impressive bull run starting at approximately $ 7450, reaching almost $ 10,500.
An increase of almost 40% in just two days. However, the asset’s inability to stay above $ 10,000 and subsequently above $ 9,000 threw a bucket of cold water at most traders.
The next two months were of concern, with Bitcoin losing for a short period (on December 18, 2019, to be more specific) support at $ 6500, recovering it shortly thereafter.
From that moment on, what we saw was an asset in constant price evolution, generating new tops consistently and creating a new wave of optimism in the crypto community. Two questions, however, remain in the air: will BTC be able to stay above 10k this time? And what is driving the current high?
Graph by: TradingView
New impulses and old challenges
Whether Bitcoin will be able to stay above $ 10,000 is not the simplest task. First because of the lack of a really functional crystal ball, and second because it is a band that currently marks an important resistance for BTC.
After losing support at 10k for the first time during the crypto winter of 2018 (on January 17, to be more specific), the area in question has become an area of constant instability. Even struggling to stay above $ 10,000 for two months, support was definitely lost in March of that year, generating well-established resistance.
For more than a year Bitcoin hasn’t even touched the dreaded 10k again.
More recently, in June 2019, Bitcoin once again overcame resistance, but failed to consolidate, which led to further sharp declines.
In order not to have a repeat of the past, it would first be important for BTC to reach the range of US $ 10,800 – US $ 11,000 and, subsequently, US $ 12,000 – US $ 12,200. The two regions represent the last two tops not yet surpassed by Bitcoin.
Consolidating above these targets, the biggest challenge would be to break the resistance at $ 13,800 – $ 14,000, a region that stopped Bitcoin’s advance during the June high. Until that happens, the $ 10,000 zone will continue to act as a key support / resistance zone.
But what is this rise based on? We can point out some main factors, of fundamentalist and technical character.
From a technical point of view, we see BTC breaking all the resistance that has been imposed on it since the bottom of December 18th. We also find ourselves again above the average of 200 periods, which is extremely representative for the definition of an asset’s long-term trend.
However, it should be noted that the current high is already somewhat stretched, even with the Stochastic RSI indicating an intense overbought. It wouldn’t be surprising to see Bitcoin correcting in the coming days, which is even the healthiest path for BTC.
Graph by: TradingView
On the fundamentalist side, the proximity of halving has driven Bitcoin, even bringing new historical maxims in the hashrate during the month of January. Mining has been at its best since early 2018, and the trend is to stay that way until halving takes place.
The Coronavirus outbreak has also been positive for Bitcoin. Acting as a store of value, investors have chosen BTC to protect themselves during yet another crisis that tends to take on a global character.
Finally, we must pay attention to the fact that we are talking about Bitcoin, which sometimes does not respond as expected to trends and expectations, both graphic and fundamentalist. Remember to always keep the stop prepared and respect your risk management.
* This analysis is for educational purposes only and does not constitute a recommendation to buy or sell. Invest wisely.