As Bitcoin Rallies, Is A Break Above $40,000 In The Cards?

Zinger Key Points
  • Bitcoin has to convincingly break above a consolidation area of around $38,750 seen for much of January to confirm bullish momentum.
  • The relative strength index is around 40, indicating that Bitcoin is approaching the neutral territory.

Bitcoin BTC/USD took another leg down in the middle of February, leading to fears that a crypto winter, akin to the period following the crypto market crash of 2018, may be right around the corner. The apex currency, however, is fighting back after bottoming close to the $37,000 level.

Bitcoin Bulls Defy Geopolitical Risk: After peaking in early November, Bitcoin along with the rest of the cryptos were roiled by the macroeconomic uncertainty surrounding potential Fed rate tightening in the U.S.

The correction that followed took Bitcoin to a low of $33,184.06 on Jan. 24, a peak-trough decline of over 50%. A modest recovery materialized thereafter, and the apex crypto rallied and topped out at $45,661.17 on Feb. 10.

The Ukrainian crisis, that deepened around that time, proved to be the undoing of the recovery and Bitcoin reversed course, although the apex crypto is finding support around the $37,000 level this time around.

After the steep sell-off seen since last Thursday, some semblance of normalcy returned to most financial markets on Wednesday. However, stocks are still see-sawing, crude oil prices are rallying, and bond yields are rising – all suggesting that risk aversion is still in play.

However, cryptocurrency markets have seen a definitive reversal. Bitcoin has held mostly above the $38,000 level, while trading in a range of $37,691.17-$39,121.05.

Related Link: Crypto Is Crashing But Ethereum Founder Vitalik Buterin Isn't Worried About A Crypto Winter

Will Bitcoin Find Its Way Back Up: Technically, Bitcoin has to convincingly break above a consolidation area of around $38,750 seen for much of January. Further up, it has resistance around $40,406 at which was a key area of resistance a couple of times in mid-2021. It has another barrier around its 50-day simple moving average, or SMA, of $40,638.

On the downside, it has to hold support around $37,000 and $35,000 to avert a free fall.

Source: Yahoo Finance

Given the relative strength index (RSI) – a momentum indicator - is around 40, Bitcoin is approaching the neutral territory. The near-term trajectory will hinge largely on how the geopolitical and macroeconomic dynamics play out.

At last check, Bitcoin was seen trading flat over a 24-hour period at $37,881.17.

Related Link: Why This Analyst Thinks Bitcoin Is Unlikely To Be Challenged By Altcoins

Photo: Courtesy of QuoteInspector on Flickr

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