Bitcoin soared as much as 11% on Wednesday amid optimism about the trajectory of US regulation of digital assets. Those gains proved short-lived as traders digested the news, with the token trading back below $40,000.
S&P 500 and Nasdaq 100 index futures turned negative around the same time as the price of bitcoin. The cryptocurrency has been relatively correlated to US stocks since the start of the Covid-19 pandemic, increasing this coupling since last summer.
“Having realigned with risk assets, Bitcoin is riding the risk wave, in true crypto fashion,” said Craig Erlam, an analyst at Oanda at Bolsamania. The optimism seen in the markets on Wednesday, in equities, oil and metals “looks brittle at best, so while crypto traders may be eyeing $45,500 and wondering “what if,” we are one headline away from these gains being wiped out quickly,” warns the expert, who recalls that this “has been the case for weeks.”
On the other hand, from a technical analysis point of view, the price was not able to sustain above $40,000 and actually got rejected at the $42,500 – $42 zone. .700, where resistance can be seen on weekly charts.
Regarding the very short term, “we have the price of bitcoin in a no man’s zone, somewhat far from the key supports and resistances. There is significant support on the rising line linking each and every one of the successive rising lows since last summer.“, commented José María Rodríguez, an analyst at Bolsamanía. “Not to mention the lows for January (32,855) and the lows for February (34,295). And above that we have the latest falling highs with particular relevance to the February highs (45,905),” he adds.
“There is still a lot of cloth to cut, but there is no doubt that above $46,000 dollars with ease we will have an important sign of strength in the king of cryptocurrencies. Without a doubt it would be a before and after. In the same way that the perforation of the January lows would be a new jug of cold water,” the analyst concluded.
Based on wave count analysis, the underlying trend is down as short-term rallies are corrective. As a result, a decline with the magnitude of the previous rally (highlighted) could follow. This would take BTC to a low of $34,440, very close to its February lows. Even at a minimum, BTC could pull back to sweep the March 7 lows at $37,193.
Source: Ambito
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