The Bitcoin (BTC) price has seen a notable rally, surging more than 5% in the past 24 hours, bringing it to a trading value of $37,460 as of 2:30 a.m. EST.
This recent price movement follows a sell-off on Tuesday, where BTC briefly dipped to as low as $34,770. However, Wednesday saw a resurgence in bullish activity, resulting in the largest daily candlestick since October 23, with Bitcoin approaching the $38,000 mark.
The rally on Wednesday was primarily driven by a drop in the U.S. dollar index (DXY) and the treasury yields, which alleviated some pressure on risk assets. This shift in market sentiment occurred in response to the latest inflation data, which indicated a lower-than-expected increase in both headline Consumer Price Index (CPI) at 4% (versus an expected 4.1%) and core CPI at 3.2% (versus an expected 3.3%). This data led traders to re-enter the market, as it cooled expectations of additional interest rate hikes by the Federal Reserve.
For digital assets like BTC, this news was positively received, as BTC is a non-interest-bearing asset. Higher interest rates would result in a greater opportunity cost of holding BTC.
During this week’s market volatility, data from Coinglass, a crypto futures and information platform, revealed that long positions bore the brunt of liquidations, with nearly $110 million worth of long positions being liquidated during Tuesday’s pullback, in contrast to $18.8 million worth of liquidated short positions.
The current bullish sentiment in the crypto market reflects the increasing interest in the asset class, with both institutional and retail traders showing growing levels of engagement, particularly in anticipation of the approval of a spot Bitcoin ETF in the near future. Additionally, the upcoming Bitcoin halving, expected in April 2024, is considered a significant driver of the current bullish momentum.
Crypto trader and investor known as Titan of Crypto on X stated, “Make no mistake about it, the halving rally is going to happen. BTC is in the last straight line, FOMO will kick in hard very soon.”
The combination of factors, including the potential approval of a spot Bitcoin ETF, the impending halving, and global financial conditions, has created highly favorable conditions that are anticipated to make the next bull market one of the largest in the history of Bitcoin.
The BTC rally initiated on October 23, with Bitcoin bouncing off the 200-day Exponential Moving Average (EMA) around $26,850 and surging 41% to nearly $38,000 by November 15. Although the price has slightly retraced from these levels, the technical indicators suggest that BTC’s uptrend remains robust.
Major EMAs (Exponential Moving Averages) are moving upward, underscoring the strength of the uptrend. These EMAs also serve as strong support levels, including the 50-day EMA, the 100-day EMA, and the 200-day EMA at $32,725, $30,704, and $28,993, respectively.
The Relative Strength Index (RSI) indicates that Bitcoin is in the positive region, with a reading of 69, suggesting that market conditions continue to favor the upside. This implies that BTC may see further price increases, potentially reaching $40,000 and subsequently targeting psychological levels at $45,000 and $50,000.
However, it’s worth noting that the RSI indicates Bitcoin has recently been overbought, which could lead to a slowdown in buying momentum as profit-taking occurs. In such a scenario, BTC might retrace from its current level, with potential support levels at the 78.6% Fibonacci retracement level at $35,613, the psychological level at $34,000, and the support floor at $32,400, aligned with the 50% retracement level.
Traders should be prepared for short-term market fluctuations, with a potential 14% decline from current levels if BTC experiences a correction.
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