Bitcoin Weekly Outlook: A $70,000 BTC Likely Despite Brutal Sell-Off
Bitcoin had a super-depressive weekend session as traders decided to secure the profits off its Coinbase-led market rally, but all is not lost for the flagship cryptocurrency yet.
Bullish traders showed remarkable resistance against the declines in the BTC/USD exchange rates. In retrospect, the weekend crash came as a part of a broader downside correction that began after the pair refreshed its record high to $64,896.75 (data from Coinbase).
But it retraced shortly after testing its 50-day moving average (the blue wave) as support, a move reminiscent of Bitcoin’s multiple upside retracements since October 2020.
The 20-DMA support appeared in confluence with another price floor, provided by the lower trendline of an Ascending Channel. It marked Bitcoin’s third detailed retracement off the Channel’s support, raising expectations that the move would extend itself towards the structure’s upper trendline, which sits near $70,000.
Conversely, a breakdown below the Channel support risks crashing the prices by as low as the structure’s maximum height. That set the Bitcoin en route to $42,000, a level that served as resistance during Bitcoin’s uptrend in January 2021, only to flip into support following an upside breakout in early February 2021.
But…
…the question remains: Does Bitcoin has the fundamental capability to log a wild move towards $70,000, or is it more prone to fall prey to profit-taking? The on-chain data attempts to answer.
Blockchain analytics platform Glassnode cites metrics that show serious investors in no mood for selling. According to the portal’s entry-adjusted dormancy flow, a metric that shows the amount of dormancy in the coins getting sold onto the market, a higher bitcoin price has failed to influence long-term holders into selling their tokens.
The chart below shows the historical peaks of dormancy that Bitcoin has reached in previous bull cycles. In comparison, the current trend still has a lot of room to run upwards.
More Bullish Tailwinds Come from Inflation Fears
The March US Consumer Price Inflation came in stronger than anticipated, with the headline figure at 2.6 percent year-on-year, up from 1.7 percent. Meanwhile, the month-on-month timeframe experienced a 0.6 percent spike, led by a 0.3 percent increase in core inflation.
Bitcoin tends to stay bullish against rising inflation, partly because of anticipations that it would decrease the US dollar’s purchasing power over time. Federal Reserve’s heavyweights Jerome Powell, Richard Clarida, and John C. Williams wants to maintain inflation above 2 percent while keeping benchmark lending rates near zero.
Lower rates reduce the opportunities in the US bonds market, prompting investors to search for profits elsewhere. Bitcoin has benefited from such a sentiment all across 2020.
OhNoCryptocurrency via https://www.ohnocrypto.com/ @Yashu Gola, @Khareem Sudlow