Bitcoin has recently taken a wild ride in price swings, and this has perhaps left many wondering.
Yes, the cryptocurrency managed to yet again break above $60,000 after plunging to $50,000.
But how sustainable is the present upward trend?
Or are we due for another dip?
When the value of Bitcoin crossed the $60,000 mark, for many who had invested in the market, it was literally a relief. However, there is still an air of greenness caused by caution. The $61,000 level is where Bitcoin looks to its next major obstacle: the 200-day moving average. This technical indicator is of great importance, for it usually determines the general trend in the market. Provided that Bitcoin breaks over this level and sustains above it, it could just prove beyond reasonable doubt that the bulls are indeed back in charge.
Again, there may be a probability that this breakout could be a fake one.
In case Bitcoin rebounds or falls back below $60,000, then we would witness another wonkish phase of uncertainties in the market. To the contrary, if it breaks out past $61,000, the next resistance level it should aim to hit would be that at $64,000. A clear breach of this could bring Bitcoin within a good enough distance of setting new all-time highs and restore optimism lost throughout the recent correction.
On a lower time frame, such as the 4-hour chart, Bitcoin has been making higher highs and higher lows since it bounced back from $50,000. This is an encouraging sign, but one should still be a little careful.
Agreed, the recent recovery seems to be quite strong. However, that does not guarantee that the danger is over. The market can behave in a way it likes, and more often than not, such recoveries are followed by further declines, especially if key resistance levels prove too tough to get over.
The sentiment in the futures market adds another layer of complexity to the situation.
Funding rates within the futures market had become extremely negative during Bitcoin's recent drop, with many traders thus calling for further declines. These are now positive again, which could mean that it has regained some confidence in the market.
One cannot trust a single indicator.
While that hints at a possible bottoming out of the market, it is just one piece of the puzzle. There's so much more that goes into trying to anticipate what the next move in Bitcoin will be.
For now, it's a waiting game. $64,000 and the 200-day moving average are the two barriers. If Bitcoin can overcome them and stay over these points, well, who knows, it would just be the beginning of another principal bull run. Otherwise, we may see another turn of events.