Bitcoin pared a tiny portion of its gains on Wednesday after setting up a new record high above $52,000 in the previous session.
Traders decided to secure their short-term profits as the BTC/USD exchange rate hit $52,640 (data from Coinbase), causing the pair to flip lower throughout the Asian session and ahead of the European session close. Bulls collected support around $50,00o ahead of the New York opening bell, causing the bitcoin price to recover some of its intraday losses.
Entering the US session, the cryptocurrency was back above $52,000.
In doing so, BTC/USD confirmed a strong accumulation presence near its 20-4H exponential moving average wave (green). The pair tested the said curve repeatedly as its support and successfully capped its downside bias from expanding. Meanwhile, a blue wave just below the green one—the 50-4H simple moving average—served as backup support should the price break lower.
Bitcoin also confirmed its observance of an ascending channel pattern, represented by two upward sloping parallel trendlines in the chart above. A run-up to the upper trendline opened short opportunities towards the lower trendline. Meanwhile, a rebound from the lower trendline provided equally attractive long opportunities towards the upper trendline.
So far, Bitcoin is trading inside the same ascending channel, with its intermediate short target shifting from the structure’s support trendline to the green wave. The cryptocurrency now expects to trade higher towards the resistance trendline, enabling a short opportunity towards the 20-4H EMA, with an extended downside target towards the lower trendline.
Bitcoin to $55,000; Here’s Why?
Fundamentals favor Bitcoin.
That said, the cryptocurrency could also break bullish on the ascending channel as long as traders speculate on a booming institutional adoption. Signs are encouraging because of Tesla’s $1.5 billion investment in the Bitcoin market, followed by MicroStrategy’s plans to secure $600 million via debt sales so it can use the proceeds to purchase more bitcoins.
The Nasdaq-listed software intelligence firm already holds more than 71,000 BTC tokens. Many analysts believe that its accumulation spree, coupled with similar moves by other Wall Street firms (read Grayscale), is causing a liquidity crisis in the Bitcoin market. That explains why the BTC/USD exchange rate has climbed by more than 1,100 percent since last March.
“Bitcoin were, and still are, leaving exchanges by the bucket load,” said analyst Ben Lilly. “In effect, this means the amount of bitcoin available for willing buyers is drying up. Which in turn creates scarcity, demand pressure… And the reason many of us are here: higher prices.”
That said, Bitcoin has a higher probability of breaking bullish on its ascending channel pattern. Should it happen, the cryptocurrency’s next price target is above $55,000.