Bitcoin came within a whisker of achieving a record all-time-high last night, but couldn’t sustain enough momentum to lift it above last month’s pinnacle of $58,332.
Instead, after an all-guns-blazing display from yesterday’s start-point of $53,498 up to $57,115, the flagship cryptocurrency ran out of ammunition in the face of some well-armed heavies and steadily retreated back into the shadows of $54k to $55k – a range which Bitcoin (BTC) appears to be treating as a bit of a temporary safe house over the last few weeks.
Despite the overnight slip, this latest skirmish towards the fortified lines of $60,000 augers well for those of a bullish persuasion, eager to see $60k consigned to yesterday’s papers.
Even after falling almost $4,000 in the space of a few short hours, the portents still look good for BTC to challenge what has now become a significant psychological barrier, as well as a firm level of resistance which has thickened its resolve around $57,000.
A wave of institutional money seemingly being ploughed into Bitcoin on an almost daily basis – the Aker investment arguably being the most noteworthy – could now be joined by a tide of private cash from Joe Biden’s $1.9 trillion relief bill to create a perfect storm of upward movement.
It seems clear that the US Covid-19 relief handout was the likely narrative behind last night’s steps towards a new all-time-high for Bitcoin, urged on by hedging.
The technical analysis certainly supports that theory. Trades on the 10-hour and 50-hour charts had buying lines with clear air above the averages – a bullish prognosis in many traders’ notebooks.
The implications of the US bill, cannot be underestimated. Indeed, eToro analyst Simon Peters believes it will have influence throughout all crypto markets.
“The announcement from the White House is very significant for risk assets in general, and cryptoassets specifically,” he explained.
“The $1.9trn stimulus package is already boosting Bitcoin and peers, and with the floodgates now open in terms of new liquidity for the market, we expect fresh record highs to be set for the major crypto assets in short order.
“Momentum was already building in the major crypto assets, and we expect many stimulus checks will mimic previous patterns and be invested into the markets, with Bitcoin and others like Ethereum benefiting directly.”
However, as always in cryptocurrency markets, there are alarm bells ringing – even when obvious bullish signs are being illuminated.
February’s remarkable high was tempered violently after the market became overheated, resulting in some gut-wrenching corrections.
Trading volume prior to that was looking high. Yesterday, though, volume had little in the way of the effervescent charisma it was driven by prior to planting a euphoric kiss on the cheek of $58,332 in the romantic afterglow of Valentine’s week.
That energy we witnessed a few short weeks ago simply isn’t registering as volume on any charts at the moment. Without it, Bitcoin’s current price may be regarded as ‘unsustainable’ by many investment experts.
It may be that Joe Biden’s cash handout to the American public could well deliver that energy and volume.
Some analysts have wildly claimed that up to 15 per cent of Americans will be looking to plough their cheque into BTC, and that remains to be seen.
If that were to happen, then, yes – Bitcoin should feel the surge of volume to sustain its next attempt to scale $60,000. If not, and the buying energy is low, then BTC will be reliant upon more large buying orders from institutions to carry it over the line.
The danger at this junction is, again, the risk of a new all-time-high overstretching the energy of the market and another series of eye-watering corrections – especially given the robust resistance digging in around $57k.
The next few days are going to be fascinating to observe.