Bitcoins price surged to $10,200 levels yesterday as the digital asset bounced off the 25 day moving average. The $700 dollar rally puts Bitcoin in a great position from a technical standpoint. What level could Bitcoin be eyeing in the near future?
Bitcoins Price Change
Yesterday, Bitcoin rallied $700 to surpass $10,200 levels. Throughout the day, Bitcoin printed a low around $9,450 and its high was $10,199. At the time of this reporting, Bitcoins currently trading at $10,130. According to Coinmarketcap, Bitcoin reported volume of 35,198,901,068. This was the highest reported volume in 10+ days.
Price Catalysts
U.S dollar fundamentals could be driving the surge in Bitcoin. On the three month chart, the U.S dollar index ( DXY ) recently tested March lows @ 97.80 levels. As the chart explains, the U.S dollar surged during early stages of COVID-19. As the economy essentially closed, investors were flocking to safe haven assets ( cash ) to mitigate recessionary risks. In a recent report by Visionary Financial, it was outlined that traditional markets experienced the strongest “bear rally” in 70+ years. As the market began to apply a premium to future outlook based on government assistance, the traditional markets started to see the U.S dollar lose steam. As investors left safe haven assets ( cash ), the markets started to see inflows back into riskier assets ( stocks ).
Historically speaking, Bitcoin and the U.S dollar index have been negatively correlated. As the value of the U.S dollar goes down, you tend to see a surge in Bitcoins price. With Bitcoin being a volatile asset class, it tends to perform better in an environment where investors are taking more financial risk. We’ve seen that lately as the market has been macro driven. The market has completely discounted current risks around unemployment and GDP. Instead, you’ve seen a market that believes this was all prices in. With that being said, U.S dollar value is being driven down by investors willingness to deploy capital to risk assets. With the U.S dollar recently approaching a 3 month low, it seems to be a catalyst in the Bitcoin surge. With Bitcoin potentially offering substantial upside + the ability to hedge hyperinflation, investors may be eyeing this opportunity. Other large players on Wall Street are even going as far as shorting the U.S dollar based on economic reopenings and foreign opportunities.
Bitcoin Technical Analysis
Based on recent Bitcoin technical analysis, it was originally noted that $10,500 would be a strong resistance level. After Bitcoin was able to hold key support and trade above the 25 day moving average, it was evident that a rally was brewing based on historical price action. Yesterday, Bitcoin got close to testing the $10,500 resistance level but never quite tested it. In the near term, it still looks like Bitcoin will attempt to test this level.
If Bitcoins price can test and accept $10,500 , you could see some FOMO kick in. This FOMO could potentially cause a suge to $12,200 levels. On the flip side, if Bitcoin fails to test/accept $10,500 resistance, you could very well see a retest to $9,000 arenas.
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