There seems to be no stopping the bitcoin freight train.
Having taken the 61.8 percent Fibonacci retracement level yesterday, the world’s largest cryptocurrency by market capitalization rose to eight-day highs above $7,520 today. As of writing, the bitcoin-U.S. dollar (BTC/USD) exchange rate is at $7,459 – a 2.54 percent gain for the session, as per CoinDesk’s Bitcoin Price Index
Stepping back, prices had dropped 29 percent after the developers suspended a controversial software upgrade, known as Segwit2x, on Nov. 8.
However, the sell-off was cut short near $5,500 by the 50-day moving average (MA) on Nov, 12. A rally in the subsequent days all but erased the likelihood of a drop to $5,000 levels. Then, yesterday, a move above $7,000 improved the odds of a continued rally to record highs above $7,800. Currently, BTC is just $312 short of its Nov. 8 record of over $7,800.
Possibly exerting influence on prices in recent days, comments on social media show the investor community has started analyzing the effect of a potential rotation of money out of stocks and bonds and into bitcoin. CME Group’s recently announced BTC futures contract is likely to begin trading as soon as December.
The new offering will allow institutional investors to diversify into a high yielding asset like bitcoin – especially if the equity markets respond negatively to increased odds of a Fed rate hike.
The price action analysis also indicates the tables may have turned in favor of the bulls.
Bitcoin chart
- The 5-day MA and 10-day MA have bottomed out, courtesy of the sharp rally above the $7,000 mark. With 61.8 percent Fibonacci hurdle well and truly behind us, bitcoin looks set to possibly test $8,000 levels.
- The relative strength index is overbought on the 1-hour and 4-hour time frame, hence minor pullbacks cannot be ruled out.
- Dips could be short-lived, though, and a continued rally looks likely.
- Only a sharp sell-off and a close today below the rising trendline support of $6,600 would turn the tide back in favor of the bears.
Scope image via Shutterstock