- Bitcoin is on the verge of entering risk-on mode after repeatedly testing $30,000 support level, Fairlead Strategies said.
- Bitcoin is now approaching its 50-day moving average near $38,200 after it reclaimed its 20-day moving average.
- “We would view a breakout above the 50-day MA as a positive catalyst supporting a test of secondary resistance near $44,000,” Fairlead’s Katie Stockton said.
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“Risk-on is likely to come back to the cryptocurrency space if the relief rally persists, as expected,” Stockton said.
Bitcoin has recovered a lot of ground following its steep correction to $28,800 earlier this month, with the popular cryptocurrency trading above its 20-day moving average for the first time since mid-June on Tuesday.
But bitcoin still has a ways to go as it trades 44% below its record high of nearly $65,000. The first step is for bitcoin to reclaim its 50-day moving average of $38,200, according to Stockton.
“We would view a breakout above the 50-day MA as a positive catalyst supporting a test of secondary resistance near $44,000,” Fairlead’s Katie Stockton said in the note.
What’s impressive is bitcoin’s relatively strong price action despite negative headlines, including China’s cryptocurrency mining bans, the SEC’s decision to delay the approval of a bitcoin ETF, and the UK banning crypto-exchange platform Binance.
A rally in a security price amid a constant barrage of negative headlines is typically seen as a sign by technical analysts that a bottom is in and a relief rally is likely, as sellers dry up and are outweighed by upward pressure from new buying.
And despite the steep price correction in bitcoin since its mid-April peak, the long-term trends for the cryptocurrency remain positive.
“Long-term momentum remains to the upside despite the loss of intermediate-term momentum, supporting a bullish bias even though the correction still has a hold,” Stockton said.
Bitcoin is up 25% year-to-date as of Tuesday afternoon.