Key Bitcoin Takeaways
- Bitcoin surged on Monday amid an overall bullish sentiment across the cryptocurrency market.
- The benchmark digital asset failed to extend its upside momentum beyond a critical resistance area as traders focused on Ethereum, the second-largest cryptocurrency by market capitalization.
- A weakening US dollar momentum expects to provide a bullish backstop to Bitcoin and rival assets.
Bitcoin climbed on Monday, but its gains remained limited as traders’ attention shifted to its top rival, Ethereum.
The second-largest cryptocurrency surged by up to 8.50 percent to $3,203 on Monday, driven higher by a flurry of fundamentally optimistic updates, including the European Investment Bank’s decision to issue digital bonds atop the Ethereum’s public ledger. More tailwinds for the ETH/USD exchange rates appeared due to an ongoing boom in the decentralized finance (DeFi) and non-fungible token (NFT) space.
Bitcoin appeared sidelines due to the sudden trend change. The cryptocurrency last month achieved an all-time high of $64,899 (data from Coinbase). Nevertheless, its higher valuations prompted traders to secure their profits and move the proceeds to digital assets that appeared undervalued against solid fundamental backings.
As a result, the Bitcoin Dominance Index, a metric showing bitcoin’s market share against its rivals, dropped by 34 percent from its January 2021 high. That somewhat played a key role in limiting Bitcoin’s upside bias on Monday, even though the cryptocurrency holds its long-term bullish bias against the prospect of inflation and dollar devaluation fears globally.
The Bitcoin price now trends inside a Rising Wedge, a bearish reversal pattern, while attempting to test its upper trendline as its next long target. Meanwhile, the cryptocurrency faces stiff resistance from the “selling area” mentioned in the chart below, a range that has previously capped Bitcoin’s upside attempts.
A pullback from the selling area could have traders test the Wedge support first. If the price breaks any further lower, the next target would be anywhere inside the “accumulation area.” Traders have lately treated the range as their cue to enter the Bitcoin market.