Cryptocurrency

Bitcoin Price Analysis: Bullish Reversal or Just a False Positive?

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Institutional investment and positive mainstream media coverage lead to Bitcoin price increase.

Highlights

Hallelujah! The good times are back, or so it seems for the moment. April has been a busy month and positive media coverage of cryptocurrencies has returned, bringing Bitcoin prices up 18% over the last week. While hype is a very important driver of cryptocurrency prices more fundamentally sound developments are happening behind the scenes.

Positive Developments and a bit of hype

  • Recently the Securities and Exchange Commission (SEC) decided to re-accept applications for Bitcoin exchange traded funds (ETFs).

  • Rockefeller’s venture capitalist division ‘Venrock’ partnered with Coinfund.

  • George Soros signaled that Soros Fund Management is drafting plans for trading cryptocurrencies and there are rumors that Rothschild has similar plans.

  • Insanely high price predictions are back as uber wealthy investors with magical crystal balls are throwing out to the moon valuations and receiving positive support from CNBC’s resident coin shiller Brian Kelly.  Over the weekend Tim Draper forecast BTC at $250,000 by 2022, Thomas Lee advises $25,000 by the end of 2018 and Dan Morehead of Pantera Capital projects $20,000 by years end.

Remember the promises of a $2 – 3 trillion dollar cryptocurrency market capitalization occurring during 2018? Well, we could possibly be at the beginning of this surge with the arrival of institutional money, hedge funds and Bitcoin ETFs come to the fore.

Now all of this is absolutely riveting…but there is more positive news.

  • Today (April 17th) is tax day in the United States and it appears that selling to cover capital gains has come to an end.

  • Bitcoin fees are amazingly low and the lightning network is providing quick and cheap transactions.

  • After dropping 65% from it’s December 2017 high Bitcoin appears to have bounced off a $6,300-$6,500 bottom and bull reversal might be developing.

On April 12th, BTC burst through the $7,500 resistance to shortly trade near $8,500 but we might not be out the woods yet. Let’s take a glance at the charts to see.

4 HR Chart

  • BTC broke through the descending channel indicating $6,300 – $6,500 as the bottom.

  • After turning upwards at $6,873, the 20-EMA and 50-MA continued their ascent, putting distance between each and showing the presence of bullish pressure but at the time of writing the 20 EMA and 50 MA have crossed downwards again. Furthermore, the 100-MA and 200-MA continue trending downward with the 100-MA crossing the 200-MA at the time of writing.

 

  • BTC will encounter difficulty at the 50-MA ($8,500) and above the 50-day MA the next point of resistance is $9,200 and $10,000.

Daily Chart

 

  • At the time of writing the RSI is in slight descent but the Stoch is reversing from oversold conditions. The MACD continues upward movement and profit taking from $8,300 – 8,500 seems probable.

RSI

 

MACD

  • It is likely that BTC will settle into a temporary range of $7,800 to $8,300 and will need to breech the $8,500 before moving towards $10,000.

  • Though the short and long term vision of BTC have turned positive, many of BTC’s previous support levels will now function as resistance shelves, complicating the climb back to $10,000.

  • Growth to and above $10,000 will be hampered by profit taking, regulatory scares and mainstream news coverage.

Vision

  • Profit taking will likely occur between $8,300 – $8,500 and buyers may resurface at $7,800.

  • The 50-day MA ($8,500) will serve as resistance BTC needs to cross this point in order to break towards $10,000.

  • $12,200 is still a major resistance.  

  • Continued positive media coverage and news of institutional investment in cryptocurrency will attract additional buyers.

Disclaimer: The views expressed in this article are not intended as investment advice. Market data is provided by BITFINEX. The charts for analysis are provided by TradingView.

 


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