Is Bitcoin’s Recent Bullish Move A Fakeout?
The last 24 hours have been particularly tumultuous across the crypto market, but this time everyone seems to be pro-bulls. Bitcoin price surged above $41,000 for the first time since Jan. 21 and the entire market is in the green.
What contributes to Bitcoin’s price increase?
#First. The reporting season is over
It should be noted that Bitcoin and the traditional stock market have been closely correlated for quite some time. As such, what’s happening on Wall Street has had an impact on the crypto market for some time, and it’s important to be aware of the macroeconomic factors affecting stocks.
Most tech giants and other big names in legacy markets have finished filing their financial statements for the final quarter of 2021.
#2. The US jobs report beats expectations
Recent figures show that despite the proliferation of the Omicron variant, the US added almost 500,000 new jobs in January alone.
This was reported by the U.S. Department of Labor’s Bureau of Labor Statistics report on 4.2. The unemployment rate rose slightly from 3.9% to 4% in the same period.
The report beat economists’ expectations, who forecast just 150,000 new jobs, according to a Dow Jones poll. In addition, the duration of unemployment has also decreased:
“In January, the number of people unemployed for less than 5 weeks rose to 2.4 million people, accounting for 37% of the total number of unemployed. The number of long-term unemployed (unemployed for 27 weeks or more) has fallen to 1.7 million.”
#3. It is time for an upward correction
Bitcoin price has been in a strong downtrend for the past few months and has not had a significant positive correction in quite some time.
Yesterday’s close was the largest green candle since the decline on Nov. 10, the day BTC hit its all-time high.
Now it will be interesting to see if this is a confirmed breakout of the downtrend and if the market starts to recover. Today’s weekly closing will be important.
Just fake? What’s next?
Analyst Michaël van de Poppe is digging the charts to determine if Bitcoin’s sudden bull run is sustainable.
He said that BTC retesting $40,000 could lead to market volatility.
“A busy weekend… FOMO is on the rise in markets as people feel missed…
Bitcoin managed a strong breakout after a slight surge from $36,000. Another test came at $37,000 and then started to rally… And tons of shorts were liquidated as volume increased significantly.”
Next, traders are considering where BTC could go next.
“The question now is whether this is a fakeout or a sustained move as volume is at its highest since the crash.”
Van de Poppe said Bitcoin will face stiff resistance throughout the $40,700-$41,500 region.
“If it can be broken I think bitcoin will test $44,200 but definitely towards $46,000.”
The analyst expects more people to sell around $40,700, which will put pressure on Bitcoin to slide towards $38,400.
“If bitcoin doesn’t do it today or in the next 24 hours, it’s a fakeout… and then BTC will likely test lower levels.”
The analyst cites the $38,900 level as a key support if Bitcoin slides lower. If this level cannot be sustained, he thinks BTC could drop into the $33,000-$34,000 range.
“Bitcoin is hitting resistance on a higher timeframe and most likely the price will drop a bit to find support.
If bitcoin consolidates here for a while and sustains above $39,000, there is a good chance the price will hit $44,000-$46,000.”
Van de Poppe concludes with two possible scenarios.
“Bitcoin tests $40,500 after current market crash. If it can tip over, I think bitcoin will continue towards $46,000.
If the price dips back into the $40,300-$39,000 range or below it will be an extremely painful correction and I expect the lows to be retested.”
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