Bitcoin climbed above a key psychological zone of $30,000. According to Coin Metrics, Bitcoin is up 6.38% for the day. On Monday night it climbed 7% to break through the $30,000 level for the first time since June 2022.
A move into the mid to high 30’s is likely given the breakout pattern. The conviction breakout looks strong and momentum should follow. Perhaps even causing shorts to cover their short positions.
What is the reason for this pop? According to James Lavish, managing partner at the Bitcoin Opportunity Fund, traders are likely speculating that Wednesday’s consumer price index number “could come in at a level that gives the Fed reason to think about pausing raising rates in the next meeting, thereby giving a boost to assets like bitcoin“.
The signs for this move were there on the charts. In mid March, I highlighted the fact that Bitcoin had regained a major technical level. Bitcoin appeared to trigger a head and shoulders reversal pattern, but buyers stepped in and forced a close back above the neckline invalidating the breakdown. This was a very bullish sign.
The major breakout which has triggered this new uptrend began on March 17th 2023. And this occurred while we were seeing the major regional bank crisis. Crypto bulls said this move would be expected because Bitcoin was intended to be an alternative to the banks. Thus, if banks are falling or are losing confidence, money will run into Bitcoin for safety.
But the other side is that Silicon Valley Bank had some exposure to crypto, and with the depositors being protected, this led to the bitcoin and crypto bounce.
I highlighted the breakout above the $25,250 zone in my article on March 20th 2023, and stressed how important the Bitcoin weekly breakout and close was. Since then, the uptrend has been in play.
If we take a look at the current daily chart of Bitcoin, you will see that the crypto has been in a range since March 19th 2023. When we see a range after a major spike move and after a breakout, there are two ways to play the next move. Traders either wait for the asset to pullback and potentially even retest the breakout zone, in Bitcoin’s case, the $25,250 zone. Or, wait for the range to breakout and confirm new recent highs. The latter happened.
Going forward, the next major resistance zone comes in at $32,000. Our next upside target.
If we go down to the 4 hour chart, you will clearly see the breakout zone around the $28,600 zone. Once again, I would expect to see a pullback to this zone before we head higher. As long as Bitcoin remains above this breakout zone, the breakout play, and thus more highs, remains in play.
$30,000 being a major psychological zone could also see a bid from buyers on a pullback.
In summary, Bitcoin is in an uptrend and traders should be looking to buy into this uptrend by playing the pullbacks or breakouts.