Will the bitcoin price break resistance to bring wider crypto resurgence?
Bitcoin gains have brought us back into a major resistance level, with a breakout providing a potential signal that the wider crypto sphere could surge higher.
Bitcoin leads wider crypto resurgence
Bitcoin has been on the rise over the past month, with the crypto posterchild gaining 44% since mid-December. This raises questions over whether we could see a wider bullish move come into play rather than the relatively fleeting gains seen throughout the past seven months.
Typically, we see bitcoin leads the wider crypto space higher, and that has certainly been the case given the gains seen elsewhere. In fact, the 29% gains seen since the turn of the year are somewhat swamped by some of the most popular alt-coins, with bitcoin cash grabbing the top spot with a 86% rise in less than a month.
Many crypto traders are feeling emboldened by the bitcoin halving process that is due to take place in May, with the bitcoin network offering 50% less block rewards for a miner. From an economic standpoint, many see this as limiting the supply of bitcoins, driving the price higher.
There have been two such halvings in the past, taking place in 2012 and 2016. In the months preceding those events, the price of bitcoin did see an upward bullish run as traders anticipated a new supply-demand dynamic.
The expectation is that while the current mining efforts would reward 50% less coins, a rise in the price of bitcoin should ensure that the net effect is lessened. Whether we see such a move take hold on this occasion remains to be seen, yet the moves seen thus far this year are certainly encouraging.
Bitcoin price: technical analysis
The weekly bitcoin chart puts the recent rally into context, with the price pushing higher after a deep decline into the zone between the 61.8% and 76.4% Fibonacci levels. To some extent this looks like a smaller version of the 2018 decline. Interestingly, on that occasion, the bullish reversal signal came via a break and close above the upper Bollinger band.
Many will be speculating on the possibility that this could be the beginning of another big move higher, yet we are not quite at the point where we can say that with confidence.
Utilising the Bollinger band breakout as a potential signal, it is notable that the upper band is currently placed marginally below the $9926 resistance level. That level represents the first major swing high within this downtrend.
The daily time frame highlights that $9926 level, with the recent rally looking like a potential retracement of the $9926-$6436 downturn. With that in mind, we have a clear and distinct resistance area to break through in a bid to spark a wider bullish outlook for bitcoin.
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