Bitcoin (BTC) thrived over the weekend amid the financial crisis that has gripped the US banking system and the global economy. The cryptocurrency has crossed the $23,000 mark and appears poised to take lost territory by storm at $25,000.
After closing the Chicago Mercantile Exchange (CME) gap at $19,800, BTC has managed to rally strongly. The current price action caught the bears by surprise, liquidating over $300 million in short positions in the last 24 hours.
For BTC investors, Bitcoin has served its purpose while the traditional US system has been caught in the crossfire of the Federal Reserve (Fed) and inflation rates in its mission to avoid a recession.
Signature Bank, Silicon Valley Bank and Silvergate Capital are among the victims of restrictive inflationary policies. But what are the keys to the price action Bitcoin is currently experiencing? Crypto analyst Adrian Zdunczkyk gets involved.
Critical Reasons for Bitcoin’s Rally
Bitcoin’s price is down 20% from the $25,000 peak, according to Adrian Zdunczyk. The analyst believes this confirms a local breakdown that is not affecting BTC’s long-term shift, but could indicate a correction. The 200-day moving average trend moved sideways, notwithstanding the drop below $20,000.
For the analyst, BTC’s current price action is a long-term accumulation zone between the $15,500 and $25,200 levels. The bulls appear to be in charge now as $21,700 has been taken with great conviction by investors following the ongoing global collapse in traditional markets.
The 200-day moving average has acted as a “magic” support at $20,000 which the bulls quickly regained, giving investors a perfect opportunity if another correction is imminent. Regarding this possibility, Zdunczyk said:
The 9-year season recap suggests March is a consistently bearish month with losses. With an annualized return of -64.39% and only 33.33% gains on trades, BTC investors shouldn’t put much faith in this month being bullish.
On the contrary, the 11-year “Sell in May and Go Away” pattern proves “favorable odds” for traders on the April-May price action as the annualized return of over 72% on winning trades over the period historically represents a “ optimistic outlook for the next two months,” says Adrian.
Bitcoin uptrend on the 1-day chart. Source: BTCUSDT on TradingView.com
Despite this forecast, a good Consumer Price Index (CPI) for February and no rate hikes above 25 basis points by the Fed could trigger a significant bullish trend for the most prominent cryptocurrency on the market.
A break above $24,000 and further consolidation in the previously lost zone is significant for BTC as it is in a critical area. The cryptocurrency is trying to break the resistance wall it failed to break four times before correcting below $20,000.
Bitcoin is currently trading at $24,100, up a significant 19% in the last 24 hours. In seven days, BTC has regained ground with an 8.9% gain.
Featured image from Unsplash, chart from TradingView.com
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