The Bitcoin (BTC) price has shrugged off concerns about sudden movements in long-term dormant wallets, as well as ongoing regulatory uncertainty, with Coinbase now suing the US SEC for a lack of clarity on crypto rules, and has returned to the $28,000 level for the first time in four days.
This is most likely due to an increase in technical buying ahead of the 50-Day Moving Average in the $27,200s, as well as near-term support in the form of recent lows just over $27,000.
Bitcoin’s more than 2.5% comeback into the $28,200s on Tuesday has bulls anticipating that the world’s largest cryptocurrency by market capitalization would be able to quickly reclaim the $30,000 level that it briefly conquered earlier this month.
A Bloomberg-monitored short-term buy signal went out just over a week ago, when Bitcoin was trading for just under $29,000.BTC has historically gained roughly 7% in the 10 days following this trade indication.If history is any guide, the Bitcoin price might be on its way to $31,000 within the next three days.That would necessitate Bitcoin breaking through important near-term resistance levels such as the 21DMA near $28,900 and the late-March/early-April highs in the $28,900-$29,300 range.
But, given the lack of new major resistance levels ahead of the year’s highs around $31,000, a break above this important resistance zone would open the door to more higher. Major upcoming macro risk events, such as the US GDP and inflation reports this week, followed by the Fed meeting next week, jobs and ISM survey data, might throw a wrench in the works if they deliver a major shift in the macro narrative.
Aside from safe-haven demand amid banking crisis fears and a rebound following Q4 2022’s record oversold market circumstances, one of the reasons for this year’s Bitcoin rise has been that the Fed’s tightening cycle is nearing its end.
According to the CME Fed Watch tool, the market expects one more 25 basis point rate hike to 5.0-5.25%, followed by up to 100 basis point hikes by the end of the year. Markets believe that an impending credit crunch, combined with the delayed effects of aggressive interest rate hikes, would push the economy into recession in the second half of the year, compelling the Fed to soften financial conditions to boost growth.
This is a broadly positive Bitcoin/crypto narrative, as it expects improved financial conditions in the future, weakening arguments for a lower Bitcoin price. Assuming that this narrative holds in the following weeks, the Bitcoin price should remain supported in the medium-to-long term.
As mentioned in a recent post, long-term on-chain indications and examination of Bitcoin’s longer-term market cycles are sending strong signals that the cryptocurrency is in the early stages of a new bull market.
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