Could Bitcoin continue its recovery and pull select altcoins higher?

Bitcoin (BTC) has stopped its decline and is attempting a recovery along with select altcoins. Some traders have been fearing a massive sell-off in Bitcoin but Capriole CEO Charles Edwards said that Bitcoin’s worst crashes have happened “due to miner capitulation (December 2018 and March 2020), when BTC fell below production costs.” However, the current production cost of Bitcoin was $34,000, which is well below the current price.

In a sign that institutional investors remain bullish on the crypto sector even after the recent fall, Cathie Wood’s Ark Invest bought 6.93 million shares of the special purchase acquisition company that will merge with Circle, the principal operator of USD Coin (USDC) and the second-largest stablecoin in terms of market capitalization.

Another sign that the crypto markets are maturing is the fact that nonfungible tokens (NFTs) have not responded negatively to the fall in crypto prices. A recent report by DappRadar said that NFT trading in the first ten days of 2022 generated $11.90 billion compared to $10.7 billion in Q3 2021.

The moving averages have flattened out and the relative strength index (RSI) is just above the midpoint on the 4-hour chart. This suggests a range-bound action in the short term. The pair could remain stuck between $39,600 and $45,456.

A break and close above $45,456 could tilt the advantage in favor of the bulls, signaling the start of a possible rally to $52,088. Alternatively, a break and close below $39,600 could indicate the resumption of the downtrend.

If buyers push and sustain the price above the 20-day EMA, it will signal a possible change in trend. The BTC/USDT pair could then rally to the 50-day simple moving average ($47,987) where the bears may again mount a stiff resistance. A break and close above this resistance could clear the path for a rally to $52,088.

Contrary to this assumption, if the price fails to rise above the 20-day EMA, it will suggest that the sentiment remains negative and traders are selling on rallies. The bears will then attempt to sink the price below the critical support at $39,600. If they succeed, the pair could extend its downtrend.

The bulls are struggling to propel Bitcoin above the 20-day exponential moving average ($44,415) for the past few days but a minor positive is that buyers have not given up much ground. This suggests that bulls are buying on every minor dip.

Leave a Comment