Bitcoin extended its positive traction on Friday as its price claimed an intraday high above the psychological resistance level of $38,000.
The flagship cryptocurrency hit $38,349 after the New York opening bell, iterating that traders were watching developments in the US markets before raising their BTC/USD bids. So it appears, Bitcoin’s latest leg of a sudden spike took cues from a renewed US dollar selling, which tends to boost demand for safe-haven assets.
Meanwhile, the US dollar’s intraday pullback appeared more like profit-taking by daytraders, especially amid a brighter tone surrounding the US Treasury bond yields. That said, the greenback’s downside bias expects to stay limited amid expectations of a stronger economic recovery, prospects of a new coronavirus stimulus, and progress in coronavirus vaccine rollout.
Bitcoin gave up the $38,000-level shortly after achieving it, pointing to continued uncertainty surrounding its short-term bullish bias. Bulls who see the US President Joe Biden’s $1.9 trillion-stimulus as a tailwind to Bitcoin’s growth long above $38,000 while bears who see a stronger dollar short-term sell the cryptocurrency near the said top. It is getting repetitive.
This makes it prudent for investors to wait for some time before extending their long calls towards higher Bitcoin price levels. The price weakens and falls towards the $31,000-33,000 area. That is where investors accumulate the token and push it upward all over again.
The $30,000-38,000 range is turning into a consolidation area before Bitcoin determines its medium-term bias.
“As for short-to-medium term prospects for BTC/USD, the pair presently looks to be going to its current ATH at 42,000,” Petr Kozyakov, co-founder and CBDO of Mercuryo, a crypto wallet service, told FXDailyReport.
“However, the trading pair could be challenged at around 40,000. Afterward, we expect a new selling wave that should test the 31,000 support level once more,” he added.
DeFi is Bullish for Bitcoin
Nevertheless, Mr. Kozyakov anticipated that Bitcoin would achieve fresh record highs, especially as traders have started pitting decentralized finance against the recent Robinhood app fiasco. People will start opting for investment services with no centralized control, which, in one or another, would benefit Bitcoin and its closest peer, Ethereum.
“Considering the potential implications of decentralized finances for the global finances, this novel sector can offer lots of new financial opportunities for the whole cryptocurrency market […] It is only reasonable to conclude that Bitcoin would win from the DeFi market’s growth.” — noted Mr. Kozyakov.