Fortunately for bulls, this weekend’s pullback then subsequent consolidation resolved upward, with Bitcoin on Tuesday rapidly retaking the $10,000 level.
At Tuesday’s peak, the price of the cryptocurrency hit $10,300, though it failed to break through this level when it tested it twice.
Regardless of the short-term resistance, analysts have been impressed by the 8.4% rally from the $9,500 local lows, so impressed that some are once again expecting for BTC to set new multi-month highs in the coming weeks.
Bitcoin is Preparing to Rally Even Higher, Analysts Conclude
As fast as Bitcoin dropped this weekend, it recovered. The cryptocurrency, while returning to $10,100 after Tuesday’s peak of $10,300, is currently up just over 6% since the local bottom of $9,500. The recovery comes shortly after a short-term sell trend had formed, leading some investors to fear that a return to the low-$9,000s and potentially even lower was imminent.
While it is seemingly too early to tell whether or not Bitcoin has seen a trend reversal, a number of leading analysts have shared analyses indicating that BTC is unlikely to return lower after the strong bounce off $9,500 — a key swing level from a daily perspective.
Trader Inmortal Technique shared the below chart on Tuesday, showing that Bitcoin’s bounce in the $9,500 region is similar to a previous retracement in the ongoing uptrend. BTC following the path it took last time it saw a correction like the one we saw last weekend would mean it will push towards fresh highs past $10,500 in the coming days, highs likely around the $11,000 region.
— Inmortal (@inmortalcrypto) February 18, 2020
From a more technical analysis perspective, Bitcoin just printed an extremely positive signal as explained in yesterday’s market update from Blockonomi: the 50-day simple moving average and the 200-day simple moving average crossed, with the former moving over the latter for the first time in nearly a year. Investopedia describes “golden cross” events like the one we just saw as the following:
As long-term indicators carry more weight, the golden cross indicates a bull market on the horizon and is reinforced by high trading volumes. […] It is interpreted by analysts and traders as signaling a definitive upward turn in a market.
Indeed, in 2019 Bitcoin rallied by nearly 200% from the time of the golden cross to the local top, and another golden cross in October 2015 preceded an over 6,000% move higher.
Gold’s Rally Could Aid Bitcoin
As Bitcoin has rallied over the past few weeks, so too has gold.
The embattled metal, which took a hammering for much of the last decade, has done rather well over the past 24 months, forming an uptrend after the blow-off top earlier in the 2010s.
At the time of this article’s writing, an ounce of gold is trading for $1,604, nearly the highest price in years and a price 5% higher than it was at the start of the year. The precious metal is up in the past 48 hours seemingly due to fears of the coronavirus outbreak in the Asia region.
Mike McGlone, a senior commodities analyst at Bloomberg, remarked in a bullish crypto-themed newsletter published earlier this month that rallies in gold — supported by macro factors like the coronavirus outbreak, a potential conflict between the U.S. and Iran, trade wars between China and other nations, low interest rates imposed by the world’s central banks, and so on and so forth — could benefit Bitcoin in 2020 as the cryptocurrency matures to “digital gold” status. He elaborated:
There’s little to push it lower when considering a shrinking supply, increasing adoption and favorable macroeconomics. […] Our graphic shows seemingly entrenched trends: appreciating quasi-currency prices and declining bond yields. Given advancing debt-to-GDP levels, notably in the U.S., Japan and China, it’s little surprise that alternative stores-of-value are gaining.