Bloomberg: Bitcoin Price May Soon Surpass $9,000 Once Again
After tapping $8,400 on the weekend — the lowest prices have traded at in weeks — Bitcoin mounted a strong recovery into Monday and Tuesday, with BTC rallying to just $30 shy of the key psychological and technical resistance at $9,000.
Although prices have stalled since then, returning to $8,800 as of the time of writing this on weakness in the stock market and an overall lack of market activity, Bloomberg is suggesting that the technical indicators suggest Bitcoin is once again about to surge higher.
Bitcoin Likely Preparing to Rally Higher, Bloomberg Confirms
In an article published Monday, Bloomberg shared key technical reasons why it sees more upside in Bitcoin’s near-term future.
Firstly, during Monday’s rally, which was covered by Blockonomi in a previous market update, Bitcoin managed to retake the lower band of the so-called Trading Envelope Indicator, a “gauge that smooths moving averages to map out higher and lower limits.” The outlet wrote that this is a sign it may test $10,600 — 20% above the current market price:
It may potentially test the upper limit, which could bring the coin to around $10,600. Bitcoin posted a similar move in mid-December, when it breached its lower band and rallied more than 10% in the ensuing week.
Bloomberg added that with Bitcoin’s Stochastic Oscillator currently trending around “the oversold level of 30,” the chances of a short-term rally have been “bolstered.”
Those aren’t the only technical indicators that suggest strength in the price of BTC is once again on the horizon.
Last week, this writer found that every time the VIX, the CBOE’s volatility index for the S&P 500, passed 30 in the past five years, Bitcoin was in close proximity to a local or macro bottom.
Just last week, the VIX passed 30, then returned to more normal levels this week, suggesting that Bitcoin found a bottom at $8,400, and will thus reverse higher in the weeks that follow.
.@CarpeNoctom suggested spikes in the VIX correlate (spurious?) with Bitcoin bottoms. He's not kidding.
Times the VIX passed 30 in the past 5 years:
Dec 23, 2018: a week after BTC fell to $3,150
Feb 3, 2018: when BTC bottomed at $6,500
Aug 22, 2015: when BTC bottomed at ~$220 pic.twitter.com/vS7E60rNJp— Nick Chong (@_Nick_Chong) February 27, 2020
Moreover, the golden cross of the 50-day simple moving average and the 200-day simple moving average of Bitcoin remains intact. This is important as previous golden crosses have preceded massive multi-thousand-percent rallies in the price of BTC over the course of months and years.
Fundamentals Remain Strong
The positive technicals have been accented by the strong fundamental trends exhibited by the cryptocurrency.
As reported in yesterday’s market update, BTC’s recent rally has come alongside a resurgence in the hash rate of the network. Case in point: the hash rate of Bitcoin reached a new all-time high of 136 exahashes (or 136,000,000 terahashes) — nearly three times where the metric was at one year ago.
Increases in hash rate — or at least the cost of mining the cryptocurrency — is purportedly closely correlated with price action.
Digital asset manager Charles Edwards and the team at investment firm Capriole Investments found that BTC’s fair value can be equated by determining how many Joules are used to secure the network. Below is a chart illustrating this correlation, which sees Bitcoin’s market value and energy value trend towards each other, almost as if they were magnets.
The rapidly-surging hash rate, then, implies Bitcoin will soon start to trend higher once again.
Also, on a macro level, the Federal Reserve on Tuesday confirmed that it would be implemented an emergency interest rate cut of 50 basis points (0.5%). Analysts say that this move is bullish for BTC because the rate drop effectively amounts to a devaluation of the U.S. dollar, which should result in appreciation in Bitcoin and other “hard assets.”
The post Bloomberg: Bitcoin Price May Soon Surpass $9,000 Once Again appeared first on Blockonomi.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Nick Chong, @Khareem Sudlow
