Bitcoin slid into the European session on Thursday as traders took profits from the recent price rally.
The benchmark cryptocurrency briefly topped $ 38,000, a wave high it broke last Friday after openly endorsed by Tesla founder Elon Musk. The uptrend also showed up as a general recovery trend, with Bitcoin price rising from $ 32,200 on January 31st to $ 38,769 on Thursday.
Bitcoin is trading lower after briefly closing above $ 38,000. Source: BTCUSD on TradingView.com
Bitcoin trades lower after briefly closing above $38,000. Source: BTCUSD on TradingView.com
It provided ample opportunity for traders to secure their short-term profits, thereby lowering prices.
Bitcoin’s intraday losses coincided with similar gains in the gold and silver markets, led by a firmer US dollar and better-than-expected government bond yields.
The US dollar index resumed its recovery on Thursday as traders assessed the prospect of a stronger US economic recovery. It weighed negatively on gold, whose prices fell for three days in a row. But for Bitcoin, which rebounded almost in line with the dollar, the move appeared to be more of a prejudice-neutralizing downward revision.
Pablo Piovano, an analyst at FXStreet, said the dollar could continue to rise as “the introduction of vaccines continues to foster better growth prospects for overseas economies.” This, in turn, could increase government bond yields and allow investors to hold government bonds instead of choosing riskier assets.
The US dollar rebounded to its monthly high on Thursday. Source: DXY on TradingView.com
US dollar recovers to its one-month high on Thursday. Source: DXY on TradingView.com
Meanwhile, Bitcoin bulls expect the next U.S. stimulus package to provide tailwinds to the ongoing cryptocurrency rally. The BTC / USD exchange rate rose nearly 1,000 percent amid more than $ 3 trillion in stimulus aid and the ultra-reluctant policies of the Federal Reserve.
Most of these foundations are still in place. The US Federal Reserve confirms it will keep interest rates low through 2023 while ignoring cuts in its $ 120 billion monthly bond purchase programs. In addition, US President Joe Biden plans to launch the third stimulus package worth $ 1.9 trillion.
Bitcoin technical analysis
The technical signals show that Bitcoin is flirting with the idea of moving towards its 20-period moving average (in green), as shown in the table below. The wave has a history of providing little support for Bitcoin’s short-term uptrends.
Bitcoin is looking to retreat towards the green wave in support. Source: BTCUSD on TradingView.com
Bitcoin eyes a pullback towards the green wave for support. Source: BTCUSD on TradingView.com
However, a prolonged pullback can see Bitcoin on its way to its 50-period MA (blue), another respite for the bulls, and the confluence of the previous lows in the $ 33,000- $ 34,000 range.
A high volume closing price above $ 38,000 could cause the BTC / USD rate to hit $ 40,000, subject to the breakout target set by the previous falling wedge pattern (blackened area).