Over the past few hours, Bitcoin has mounted a comeback; after falling as low as $7,590 in step with a similar drop in the price of equities, the cryptocurrency surged towards $7,900.
While some say this is just volatility, there is purportedly evidence that an uptrend is forming, one that could take BTC above $8,000, then potentially higher to recover some of the strong losses the asset incurred at the start of the week.
Bitcoin Forms Flurry of Positive Signs
Analyst JB recently noted that there is a confluence of technical analysis signs suggesting Bitcoin could soon see some strength:
- The price of the cryptocurrency has bounced cleanly off the key $7,700 support level, printing a number of wicks under that level, suggesting there remains buying interest.
- BTC hit a volume profile gap, bouncing off it.
- The “Willy” indicator is oversold, which last took place near the $6,400 bottom in December, then once before prior to the 40% “China pump” seen in October.
- Bitcoin is printing a potential divergence with the one-day Moving Average Convergence Divergence (MACD).
#Bitcoin 1D setup: Support level, OTE long zone, VP gap hit, Willy over-sold and potential MACD bull divergence. pic.twitter.com/3020sXqnUj
— jb (@blackswan0815) March 11, 2020
He continued his train of thought in a later tweet, noting that the one-day and three-day Stochastic Relative Strength Index, which is a measure of momentum and trends, is looking like “they could turn here” to the upside. Should this take place, Bitcoin could be cleared for a short-term bounce at the very least, one that will likely take it past $8,000 once again.
Importantly, the one-week Stoch RSI is currently “charging down,” but is nearing the oversold region, meaning that price may trend lower for maybe another week before a potential bounce can form.
Bullish reversals in the one-day and three-day Scotch RSI marked the return to a bull trend in December, prior to Bitcoin rallying 50% to $10,500, along with the bottom prior to the aforementioned China pump.
#Bitcoin 1D and 3D Stoch RSI look like they could turn here. 1M is looking decent but 1 week is still charging down.
Decent setup. pic.twitter.com/KYwaHakOxB— jb (@blackswan0815) March 11, 2020
There are also fundamental signs that BTC could soon see some strength.
The difficulty of the Bitcoin network, meaning how hard it is to put blocks into the chain, recently increased by 7%, indicating that miners remain optimistic about the future of BTC despite the recent market weakness.
Also, governments have been forced to intervene to save a potentially catastrophic economic and monetary situation due to the coronavirus.
The Bank of England (the central bank of the U.K.) has cut its policy interest rate by 0.5% to 0.25% as an emergency measure, Italy has just announced a €25 billion package to deal with the outbreak after quarantining the whole country, and the European Commission has pledged to help member states get ready for the economic effects of the virus through more flexibility in budget rules.
Analysts say that this seeming move to MMT and Helicopter Money will spur the growth in scarce assets like Bitcoin and gold.
Featured Image from Unsplash
