A Fresh Assault On $30K. Can the Bulls Break it This Time?
The Bitcoin rollercoaster was firing on all cylinders this week, peaking at $30,000 on Wednesday before losing almost $3,000 in a matter of hours. As of this writing, BTC/USD is trading at 29,500, and it looks like the bulls are ready to make another push above the psychological level at $30K.
The flagship cryptocurrency was trapped in a narrow range between $27,000 and $28,000 for a few consecutive days from late March to early April. As many of you know by now, a period of sideways movement is usually followed by strong volatility, so the recent rollercoaster wasn’t a total surprise.
Soon after the initial drop, the bulls took charge, moving BTC toward the north with force. This led to the liquidation of over $100 million in shorts. It’s one thing to see increased volatility after a period of sideways movement, but it’s a totally different thing to see an asset shed almost 10% of its value in a few hours only to get it all back in a day. So there had to be something more behind the move. Fake news. That’s what it was.
Rumors surfaced, stating that wallets linked to Mt. Gox creditors and the U.S. government had started to sell their Bitcoin. This was the trigger for the initial drop and when the rumors were debunked, the bulls went on the attack, challenging $30K at the time of writing.
The Banking Crisis Is Not Over
The rise in confidence could be also attributed to the growing unease surrounding the banking sector. The shares of First Republic Bank have plummeted by 60% since the beginning of the week, with its price declining over 95% year to date. Investors were alarmed by the bank’s report of a significant drop in deposits. Also, the reported outflows surpassed $100bn during the first quarter. Bitcoin is considered by many a hedge asset, and that’s probably a reason for increased interest in the “digital gold”.
Chart Analysis – BTC/USD
After the failed break of $30,000, the pair started a sharp pullback and dropped to a low of $26,980. Almost all the losses were quickly recovered and right now Bitcoin is changing hands at $29,400, very close to the key resistance at $30K.
Looking at the charts strictly from a technical perspective, the price action is textbook. The pair encountered a major level of resistance, with the RSI very close to overbought levels, which resulted in a bounce lower. The bearish move extended to the first support represented in this case by the 50-day Moving Average, the lower Bollinger Band, and the technical level at $27,000.
If the ‘textbook’ behavior is to continue, the bounce at support will drive BTC/USD above the resistance level at $30,000. There was a lot of interest shown by buyers at $27,000 and Bitcoin is in an uptrend since the beginning of the year.