BTC/USD technical analysis suggests that a $1,300-weekend pump in the Bitcoin market is not enough to guarantee further gains as the new week kicks in.
According to the analyst Vince Prince, the recent rally’s BTC/USD exchange rate has placed it near an ideal sell-off position. In a note that was published Sunday, the chartist said that Bitcoin approached a so-called “upper resistance cluster” with a recent history of rejecting upside attempts.
According to a chart presented by Mr. Prince, the price ceiling is a part of a Descending Channel formation. BTC has lately been trading downwards inside the bearish structure, leaving behind a sequence of higher lows and lower lows. On Sunday, it formed another higher low, a move that typically follows a downside correction.
However, shortly after Mr. Vince stated his note, the BTC/USD exchange rate broke above the Descending Channel’s upper trend line. The move nevertheless accompanied lower volumes, which casts doubts over its longevity as a breakout action. As a result, the possibility of the pair reentering the Channel appears high.
Mr. Prince’s near-term BTC/USD technical analysis came in the wake of its higher bearish bias near local tops. BTC lately hit a record high just shy of $20,000 but failed to continue its upside move any further due to profit-taking sentiment. Its repeated attempt to close towards $20,000 again met with similar selling bias.
However, BTC’s medium-term outlook showed it inside an Ascending Channel formation, revealing that the flagship cryptocurrency may approach $20,000 for a breakout move sooner or later. The bullish structure’s resilience laid in its support trendline that repeatedly held the price from pursuing into a breakdown move.
SUPPORTIVE BITCOIN FUNDAMENTALS
The BTC’s upside outlook also takes cues from supportive macroeconomic fundamentals. In its latest research note, JPMorgan & Chase stated that the cryptocurrency’s market capitalization could grow by another $600 billion primarily after insurance giant MassMutual’s $100 million investment into it.
“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example,” the note stated.
More companies have begun to exchange their cash reserves for BTC over their fears of the US dollar devaluation, following the Federal Reserve’s commitment to target 2 percent-plus inflation and the prospects of the second coronavirus relief bill.