It’s been a few weeks since our last Bitcoin Analysis piece, but we are back and ready to dive back in! Bitcoin has been up to a lot since our last article, which was published in early December when Bitcoin was still trading under $20k. We had predicted in the past that a price target for Bitcoin this cycle was around the $50k mark – and we were correct! Bitcoin has fluctuated around this price point, and seems poised to test new highs. Let’s take a look at the charts, as well as conduct some fundamental analysis and see if we can predict future trends!
Price Analysis
BTC/USD 4H Chart taken from Tradingview
Bitcoin has ranged in the 40-50k zone since it crossed this threshold in early February. It now appears to be approaching the $58k mark, which was our previous high. If the price breaks and holds above the $58k resistance, we could see Bitcoin test $60k. If Bitcoin fails to break $58k, it is likely we return to the $50k price point to test support.
Looking at the moving averages, we can see that the yellow 200MA line acted as strong support after the initial fall from $58k. This 200MA has continued to rise, and is now positioned between $48-50k. This is our support zone.
A looming bearish sign is the flatlining 100MA, which could soon push a bearish cross beneath the 200MA. Remember, whenever 20MA>100MA>200MA, we are in a bull cycle (for a given timeframe). Likewise, whenever 20MA<100MA<200MA, we are in a bear cycle. If Bitcoin fails to break above 58k and retraces, we could see a death cross scenario.
BTC/USD 1D Chart from TradingView, Moving Averages Shown
Looking at the much larger 1D chart, we can see that the market has been highly bullish for a long time – and we are way above our support levels. The 100MA is currently sitting at $35k and the 200MA at $23k. If we move into a bear cycle, look to these areas as key support levels.
BTC/USD 4H Chart, RSI shown
The Relative Strength Index (RSI) is one that we often use to determine if the market is overbought or oversold in a given timeframe. Whenever the index trades above the purple zone, we are overbought, and likewise oversold when trading under the purple zone. As it stands, we are overbought – meaning we are likely due for a correction soon. This makes it look unlikely that Bitcoin will break the $58-60k zone resistance, but stranger things have happened.
Investor Sentiment
Fear/Greed Index, taken from Alternative.me
The Fear Greed index is one that we often use to predict large market movements. We have been in the “extreme greed” territory for the past several months, but we have now entered the “greed” territory. Generally speaking, “extreme greed” means that we will correct down. However, “greed” is not a strong indicator by itself and could easily go back to “extreme greed” zone.
Fundamental Analysis
Taken from Blockchain.com
Bitcoin’s hash rate continues to be strong – climbing back upward toward its yearly high of 165m TH/s, which was achieved on Feb 8. A high hash rate means that the network’s electricity consumption is high – keeping the mining cost high (and subsequently, Bitcoin’s inherent value).
Fundamentally, Bitcoin continues to be very strong – with institutional investment continuing on a daily basis. Today alone, Israeli Pension Giant put $100M into Grayscale, and the newly passed stimulus in the United States has pushed Bitcoin closer to its all time high. This comes on the heels of big companies such as Tesla, who have diversified a portion of their company holdings into Bitcoin.
Conclusion
Bitcoin’s latest bull run has brought us to record highs, and it may not be over yet. It’s looking like it will retest its all time high before making a decision point. The indicators seem to predict that it will not break the $60k level before retracing, but anything can happen. The market remains greedy, and is becoming heavily overbought. Look at $60k as a strong resistance, and $50k as support.
This is not investment advice. Article is intended for education and entertainment only. Do your own research.
