Bitcoin (BTC), along with the majority of other cryptocurrencies, has recovered all the losses it made in March and April as a result of the coronavirus pandemic. In early March the crypto market dropped by almost 50% in a matter of days as stock markets around the world collapsed. Commodities, including oil, were hit hard in as the true scale of the coronavirus pandemic sent shockwaves through global markets.
However, while many other financial markets struggle to make a recovery, Bitcoin has managed to reclaim all of its losses. It has now broken back above the significant $8,700 mark that it lost in early March, having climbed 13% in just the past 24 hours.
Breakout or fake out?
Can Bitcoin now hold this level or is it too early to celebrate? Earlier today it tested $9,000 but was quickly rejected and knocked back down to $8,600. It’s not surprising as $9,000 has historically been a tough level to crack and with a climb this quick it hasn’t had time to solidify support.
What we’re seeing now closely resembles the fast climb and rejection that Bitcoin faced in late May last year. Back then, the resistance didn’t hold for long and by mid-June BTC/USD had broken $9,000 and peaked at $13,000 by month-end. However, we’ve been seeing Bitcoin hitting lower highs now for almost a year which differs from the situation in mid-2019. To confirm a trend reversal it would need to break above the $9,200 level on its current converging triangle pattern.
Short or long?
Right now is a tough time to be calling longs, with even the most confident of bulls a bit hesitant. Derivatives trader and popular CryptoTwitter voice Tone Vays is leaning bearish, posting earlier that he took profits at $9k and is now expecting a dip.
There certainly isn’t a strong argument for a further upside but I wouldn’t be too shocked if we saw a minor push to $9,200 before a return to mid-$8,000. RSI on 14-day is saying sell but short term moving averages are all sending a strong buy signal so technicals suggest some legs on a possible short term rally.
Author and trader Peter Brandt, who recently said he wouldn’t comment on Bitcoin anymore, couldn’t help chiming in with a bit of humor, saying “This is a 28-month coil with the price action most recently being the famous “six-blind-mice signal.” Despite the post being tongue in cheek, his accompanying graph displays an accurate analysis of BTC/USD trading sideways towards in a converging triangle with a potential retracement to $5,000 around mid-July.
Other charts foresee the possibility of a similar outcome, with another possible retest of $3,000 by September. However, troubles in fiat markets could help drive Bitcoin further up, especially the US dollar. With the Fed printing money like mad, while fewer goods are available, inflation is shooting up sending people clamoring for safe havens like crypto. Could this be the event crypto needs to finally prove its worth and break into the mainstream?