Bitcoin has had a tremendous week. It shot through the $11.3k resistance that it needed to as news of Square’s allocation of bitcoin was released. This along with traditional markets pricing in a stimulus package caused the price to rally from $10.6k to $11.5k. Let’s dive into the state of the market and see where bitcoin needs to be next in order to revisit its old highs.
Next Target To Hit
The daily chart below shows clear upwards movement, nearing closer to the next critical resistance level. The next resistance zone to stay in is $12k-$12.4k. Staying within this new resistance zone with consistent volume and enough buying power will give bulls the momentum they need.
We can be sure that we’re in a bull run when negative news does little, but positive news does wonders. This was seen recently when there was much negative news around hacks, arrests, and project fails, which barely affected the market. What did affect the market was positive news like Square’s allocation of $50 million worth of bitcoin. This news led to a strong bullish reaction across crypto markets, giving some DeFi tokens the bounce they needed.
Comparing to Early 2016
When compared to the previous bull cycle in 2016, we see a few similarities in movement. In 2015 and 2016, a period of six months was defined by range-bound construction before a breakout happened.
Compare the daily chart from 2015–2016 and 2019–2020. See if you can spot the sideways periods on both graphs. History tells us that $12k is the next resistance level to beat, but we might have to be patient, just like we were in 2016. Just like in the past, we may have a correction and have to rebuild fundamentals to break through $12k. Once that level is broken, we can set our targets as high as $17k.
All markets are depending on a stimulus package to come our way soon. Goldman, Sachs has recently announced their bearish view on the greenback and predicting all assets to rise as the dollar falls. This would be of course accelerated if the government continues to give out handouts to citizens and small businesses in need. The fear of negative real interest rates in the U.S. are starting to actualize as governments around the world continue to give out cheap debt in order to stimulate their economy. All-in-all this is uncharted territory and although scary, this can make assets like gold and bitcoin shine.