Bitcoin Breaks Key Resistance. Now What?
Galaxy Digital CEO Sees Crypto “Significantly” Higher in 2022.
After months spent between $37,500 and $45,000, Bitcoin finally managed to escape the range and broke the upper barrier of the channel. But after reaching as high as $48,234, the apex cryptocurrency has returned to the previously broken level of $45,000 and is currently trading slightly below it, at $44,600.
The Nasdaq and the S&P500 slumped 1.5% and 1.6% respectively on Thursday, which was caused by rising inflation in the U.S. and the war between Russia and Ukraine. Risk assets are affected by the current environment and Bitcoin is no exception but the recent pullback could also be a consequence of the EU Parliament’s vote to ban crypto anonymity.
The draft is meant to include self-hosted crypto wallets (Ledger, MetaMask, etc.) into the Anti-Money Laundering rules, meaning that transactions will have to go through identity checks. Next, the draft will enter the trialogue negotiations phase, which will take several months. The three parties are the European Commission, the European Parliament, and the EU Council.
Despite the recent slump, Galaxy Digital CEO Mike Novogratz sees cryptocurrencies “significantly” higher by the end of the current year. Novogratz correctly predicted that Bitcoin would have a bearish beginning of the year due to the Fed’s relatively quick decision to taper and the consequent weakness in the equity market.
Of course, the fact that he predicted the bearish phase doesn’t mean that he will be right about the bullish phase but Novogratz mentions that mass adoption and innovation in the crypto space will play an important role. Indeed, these are factors that can catapult Bitcoin and other digital assets to new highs but it remains to be seen how the other factors will affect the market.
Chart Analysis – BTC/USD
After the break of $45,000 resistance, Bitcoin continued upwards and briefly breached the next level at $47,000 but that’s where the climb stopped, at least for the time being. The Relative Strength Index just barely touched its overbought level before the price reversed, showing that we are still in a ranging market, not a trending one.
Once again, the level at $45,000 is of utmost importance because it can act as support, pushing the price higher. Oftentimes, after a break, the asset’s price returns to the recently broken level for a re-test; if that re-test results in a bounce, then the level turns into support and the price continues higher. Otherwise, the break turns out fake and the price returns within the range.
The picture is unclear at the moment and a lot will depend on how Bitcoin behaves at the $45,000 S/R level. Caution is recommended until more clues emerge.
