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Not ready for a rally: Bitcoin is out of a sideways rally, but not rising further 

Bitcoin made new all-time highs this week, reaffirming its leadership among the fastest-growing financial assets as the world's main cryptocurrency has risen 2.2 times since the start of the year.

This time, technical factors, rather than news stories, caused the currency to break through the resistance that it had not reached in a month. Unlike in previous cases, the bitcoin's exit from a prolonged sideways slide did not trigger a subsequent rally. But most experts are expecting a continuation of the rise, and there are reasons to do so. 

Investors spooked speculators 

Last week's highs might have been reached earlier if not for an alarming incident that occurred in mid-March. On the night of Saturday, March 13, as market liquidity declined, bitcoin started buying heavily. As a result, bitcoin easily broke through the $60K mark and even reached new all-time highs on March 13. Normally, speculators increase the number of short positions near such highs, hoping that the asset will not pass the level. But the breakdown of $60 thou caused the stop-orders to close the shorts, which only strengthened the growth. 

Many speculators and trading robots began to roll over to the long side in anticipation of a new bitcoin rally. At the same time, huge selling began, with many bids of several million dollars appearing in the stock market cup. In the course of trading, it was clear that these were real sellers, not speculators, who were trying to move the market in the direction they wanted by placing and withdrawing their bids. 

From this experienced players drew a simple conclusion: some very large bitcoin holder decided to fix profits, made a breakthrough of the level on the low-liquid market on the weekend eve with not very big money, forcing smaller players to join the purchases, and later just "covered" them. 

Such situations (albeit much rarer) also occur in the classic stock market with not very liquid assets. As a result, the new growth wave very quickly drowned out. It's hard to say whether the big seller realized his goal, but he scared the market. In addition, the false break of the level only strengthened positions of crypto-bears. 

Exactly one month (till April 13), when quotations were approaching $60K, all purchases were met with increased sales. Bitcoin spent this time in consolidation, thereby removing all accumulated technical overbought. But in this way, the technical analysis pattern "rising triangle" was formed on the daily chart, which, according to the common opinion, breaks up in most cases. And then everything is the same as usual: another break-up, closing of the shorts and buying in anticipation of a new rally. 

Growth drivers remain in place 

Bitcoin still has medium-to-long term growth drivers, the main one being the huge amount of financial liquidity pumped into the economy during the last year. Large and retail investors alike see the cryptocurrency market primarily as a hedge against inevitable global inflation, as bitcoin volume is finite, unlike dollars, euros and (by some stretch) even gold. Speculators are still attracted by the high volatility of cryptocurrencies and the opportunity to use large leverage, which is only available in forex. 

A number of experts believe that US stocks are overbought, so capital is looking for diversification in other markets. This, by the way, has been the reason for a continuous inflow of funds from Western funds into the Russian equity market for more than 20 weeks. 

Finally, bitcoin is increasingly being recognised as a means of payment and a fully-fledged financial asset. "One constantly hears words from major investors about the recognition of bitcoin as a new financial asset to preserve value. Last week we witnessed the triumph of major US cryptocurrency exchange Coinbase, which listed on Nasdaq through a direct listing. All this shows a growing demand for crypto-assets. And bitcoin, as a major cryptocurrency, is the main beneficiary of this recognition," says Garantex cryptocurrency exchange spokeswoman Tatiana Maksimenko. 

Technical analysis also suggests this development is highly likely. A solid break of the "ascending triangle" is a strong bullish signal. However, we must remember that after that the price often tests the horizontal boundary of the triangle, in this case the level of $60K, downwards, after which the growth usually strengthens. 

On the BTC - USD pair chart, the support line of the long-term uptrend, which started in the middle of December last year, is clearly seen. It is now just under $60K, which should be considered as a very strong technical support. 

Growth betting 

So far, all predictions of a bitcoin correction are not coming true. Periodically appearing technical overbought the coin is relieved not by a correction, but by lying sideways.

 

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