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Up 90% from its low in July, Bitcoin is now within sights of its all-time high of US$64,000 or so that was achieved in April of this year.
- Short-term momentum for both bitcoin and ether has also crossed the longer-term trend, signally a potential for an even stronger rally than has been the case so far, while options positions suggest bets on a sustained advance for bitcoin.
A sharp rally in bitcoin saw a pause on Tuesday as the benchmark cryptocurrency hovered around the US$57,000 level while traders consolidated positions to prepare for the next push higher.
Up 90% from its low in July, Bitcoin is now within sights of its all-time high of US$64,000 or so that was achieved in April of this year.
As in past rallies, the reasons provided for bitcoin’s latest run-up are as decentralized as the blockchain itself, with analysts pointing to easing concerns about regulatory efforts in both the U.S. and China and signs of the hashrate (computing power used to mine bitcoin) rebounding.
Comments from both heads of the U.S. Securities and Exchange Commission and U.S. Federal Reserve that they had no intention to outlaw cryptocurrencies also helped to offset the bearish sentiment driven by China’s central bank purge of all cryptocurrency transactions.
Chartists (traders who study technical chart patterns to divine the future price of a security or commodity) suggest that bitcoin’s recent climb has activated an inverted head and shoulders pattern, with US$79,000 the next price target.
Short-term momentum for both bitcoin and ether has also crossed the longer-term trend, signally a potential for an even stronger rally than has been the case so far, while options positions suggest bets on a sustained advance for bitcoin.
According to data from cryptocurrency options exchange Deribit, open positions for the US$80,000 strike call (option to buy) for December 2021 expiry far outnumber those for the US$40,000 strike put (option to sell).
Macro traders (those who look at more fundamental reasons for price movements) however suggest that fresh catalysts will be needed to make bitcoin push beyond US$60,000 and if that provides momentum, can easily propel the cryptocurrency even higher.
Bitcoin’s relative strength index, a commonly used tool by traders to determine if bitcoin has been overbought or oversold, is pushing 70, suggesting that it is flirting with being overbought, but some traders prefer to use 80 as a gauge, especially given how much bitcoin is driven by narrative.
