Bitcoin price over the last 7 days has seen a much needed change of sentiment, rallying +9.5%. BTC most recently jumped off key support levels that could be signaling a bull push to $12,500 levels. What price levels will traders be watching to confirm a bull run in the short term, and how is the Federal Reserve essentially fueling a Bitcoin rally?
Bitcoins price has recently recouped some of its losses the last month, rallying +9.2% over the last week. With BTC technicals bouncing off key support levels, the largest digital asset by market cap could be gearing up for a bull run. Based on the last 7 day price action, here is how Bitcoins price stacks up against other large cap digital assets:
- Bitcoin: +9.5%
- Ethereum: +9.9%
- XRP: +3.6%
- Polkadot: +19.2%
- Chainlink: -7%
- Binance Coin: +23.3%
- Cardano: -0.60%
- EOS: -1.6%
Bitcoin Hash Rate – Price Catalyst 1
One of the fundamentals playing a role in Bitcoins reversal is hash rate metrics. As Visionary Financial recently outlined on Twitter, Bitcoins hash rate has created new all-time highs this year, with no signs of slowing down. It was also noted that hash rate and price action have historically been correlated. On September 14th, hash rate was moving up rapidly as Bitcoins price closed around $10,800. If we fast forward to today, BTC has surpassed $11,000 levels, currently trading around $11,030.
#Bitcoin hashrate made new yearly highs a few days ago, and has shown no signs of slowing down.
— VF (@VisionaryFinanc) September 14, 2020
This was another scenario where hash rate was a leading indicator for price action. Despite many people in the space arguing that “organic use” of Bitcoin is going down, the explosive growth in hash rate tells a different story. Hash rate and demand are highly correlated, meaning as hash rate goes up, so does the demand for Bitcoin. It is believed that peer-to-peer transaction growth around the world is fueling the organic use in Bitcoin. According to most recent metrics, hash rate is continuing its upward trajectory.
Bitcoin Vs USD – Price Catalyst 2
In previous Bitcoin price analysis, it was mentioned that the US Dollar was on continued watch, as it was a main driver behind the BTC sell-off in early September. On the 1 year chart below, we can again see how uncorrelated Bitcoin and the Dollar index are. Some of the largest sell-offs over the last year have resulted when the Dollar was rising. On the flip side, Bitcoin price has seen some of the strongest rallies when the Dollar has lost momentum. After the Dollar put in back to back weekly gains, it has slowed down a bit this week, and Bitcoins price is benefitting. During a time when the government is supporting unprecedented amounts of stimulus to support the global pandemic, hedge fund veterans like Ray Dalio believe this could result in the US Dollar being debased.
Bitcoin Technical Analysis
On September 9th, previous Bitcoin technical analysis was really focusing on the 100 day moving average. It was believed that BTC could experience another sharp sell-off if it rejected the 100 day moving average. It is important to note that Bitcoins price has not done this since early March of this year. From the chart below, we can see that BTC almost rejected the 100 day moving average, but ended up using it as a launch pad north, which ultimately was a bullish sign.
In the short-term, we will watch to make sure BTC can hold support at $10,600. If it can do so, it could very well be building momentum to $12,500 resistance. With the US Dollar showing signs of weakness during the Feds decision to keep interest rates low until 2023, this could benefit BTC. Keeping low interest rates until 2023 will make the Dollar less attractive, especially to overseas investors who can earn better yields on their own currencies. On the contrary, if Bitcoin price fails to hold $10,600 levels, we still argue that a $9,200 test could come to fruition.