Bitcoin Recovers 100% From Mid-March Price Crash, Eyeing $8K

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Bitcoin finally recovered wholly from a surprising price crash that took its prices down from $7,969 to $3,858 in March 2020.

The benchmark cryptocurrency closed above 7,800 on Monday, establishing a near-term bullish bias ahead of undergoing a scheduled supply rate cut next month. Traders anticipated bitcoin to extend its upside move further especially amidst the steadily worsening macroeconomic situation led by the Coronavirus pandemic.

“Holding above $7,600 grants further momentum upwards and possibly a breaker above resistance,” said Michaël van de Poppe, an Amsterdam-based cryptocurrency analyst, in its tweet, noting that the next price ceiling lies anywhere between $7,700 and $7,762.

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BTCUSD eyeing extended upside momentum as halving approaches | Source: Crypto Michaël

Mr. Poppe’s chart projected bitcoin well near the $8,000 on its next leg upward. Other independent analysts also projected it to close above $9,000 ahead of the May 2020 halving event.

Artificial US Stock Pump

Away from the technical projections, traders also found their bullish cues in bitcoin’s scarcity. A narrative that is playing out all across the social media sees the cryptocurrency’s lower supply rate post halving as a sign of a potential price rally. They believe more people would purchase it as a store of value against rising inflation.

The US Federal Reserve is injecting trillions of dollars into the banking system to safeguard the economy from the impact of Coronavirus pandemic. The free money so far has helped the US stocks register a remarkable recovery. Nevertheless, bitcoin bulls see the rebound as artificial since the corporate earnings of most companies have been poor in the first quarter.

“The government is rapidly seizing assets by printing money and buying stocks, while workers get priced out of owning real equity in anything,” noted John Carvalho, CCO at Bitrefill. “We are blessed to have Bitcoin as an escape hatch from such traps.”

Bitcoin’s Downside Risks

The market’s upside sentiment has not put a safety blanket on bitcoin. The cryptocurrency continues to get influenced by events in the traditional markets. As stocks fall, investors tend to liquidate their bitcoin positions for cash liquidity, so that they can cover their margin calls elsewhere.

That said, a drop in the US stock indexes could leave bitcoin hunting for profits even with a bullish catalyst like halving by its side. That is further visible in a technical indicator’s formation – Rising Wedge, which hints that a big price pullback is possible. Have a look:

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BTCUSD trending in Rising Wedge | Source: TradingView.com, Coinbase

The Wedge is a bearish indicator, showing that price would keep trending upwards but it would fall back after reaching the pattern’s apex. The downside price target in such a case is shy of $5,000. Meanwhile, breaking above $8,000 could lead bitcoin to above $9,000.

Where do you think the price before halving? Tell us in the comment box below.

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