Price continues to hold key support – Is a breakout predicted?

Bitcoin – Talking Points

  • Bitcoin continues to hold support around $28,730 – overloading trendline resistance
  • JP Morgan Upgrades Crypto, Calls It Favorite Alternative Asset
  • Guggenheim CIO Scott Minerd calls for Bitcoin to fall to $8,000 in Davos interview

Bitcoin Forecast: Neutral

Despite a broader rally last week in risk assets, Bitcoin remained silent and limited to a tight range below the $30,600 mark. Lately, Bitcoin has been trading hand-in-hand with the Nasdaq 100, with some experts calling Bitcoin a 24-hour Nasdaq proxy.” The pair has decoupled this week, however, as Bitcoin has posted 4 losing sessions in the last 5 despite the Nasdaq 100 snapping a 7-week losing streak.Is there a hangover from the recent stablecoin debacle, or is Bitcoin just a latecomer that will be looking to catch up in the sessions at come ?

Correlation between Bitcoin and Nasdaq 100

Chart created with TradingView

In a research note published this week, analysts at JP Morgan said Bitcoin’s fair value was around 30% above current levels, indicating the potential for a “significant upside” in the crypto space. The note also revealed that crypto has become one of investment banking’s favorite alternative assets, overtaking the likes of real estate and other commodities.

Despite JP Morgan’s bullish call for Bitcoin, Wall Street appears to remain divided on the price. In an interview at the World Economic Forum in Davos, Guggenheim CIO Scott Minerd called for Bitcoin to fall to $8,000. Minerd, a famous crypto bull, previously called Bitcoin to hit $400,000.

Bitcoin 4 hour chart

Bitcoin Weekly Forecast: Price Continues To Hold Key Support - Is A Breakout Predicted?

Chart created with TradingView

A gloomy macro climate has hit risk hard, but crypto even harder, with Bitcoin down around 40% this year. Around $3 trillion in total market value in the crypto space has been wiped out since November, which accurately reflects the volatility and risk historically associated with the asset class.

As mentioned, there was a noticeable divergence between stocks and bitcoin this week as risk caught a relief offer. Although Bitcoin failed to keep up with its Nasdaq counterpart, it has so far continued to hold the Fibonacci support around $28,730. The bullish momentum was capped by strong resistance at $30,600 as well as a descending trendline that has formed over the past couple of weeks. The formation of this descending triangle may indicate that a breakout may soon be on the cards.

If Bitcoin can clear this $30,600 level, the price may reach an earlier resistance of around $32,000 before any serious retracement towards $40,000 can take place. While the support at $28,730 has held up remarkably well over the past 2 weeks, it could break down if risk appetite comes under further pressure. In any downside break, traders could look to test the May 12 lows just above $25,000, which provided a stepping stone into the range we currently find ourselves in. While a sustained rally may be overdue for a dejected asset, near-term direction remains well positioned as market participants digest an ever-changing macroeconomic climate.

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— Written by Brendan Fagan, intern

Contact Brendanuse the comments section below or @BrendanFaganFX on Twitter

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