Bitcoin, BTC/USD Talking Points:
- BTC/USD has held up well of late, all factors considered.
- As looked at previously it appeared as though we’re in one of those periods where the world’s preference for an anti-fiat vehicle has shifted from gold to Bitcoin.
- So far, there’s been a clean hold of support at prior resistance from May – but there’s also been a hold of resistance at the high around 87,300 helping to develop a rather consistent range.
It was the Treasury buyback announcement that lit the Bitcoin market on fire, and in the month-and-a-half since, there’s been a noticeable shift from investors into the cryptocurrency and away from gold. The fact that BTC/USD has held up as well as it has, even with global yields flying higher, is a fact that should be respected. But we’re now at the point where the proverbial rubber meets the road as Bitcoin is testing a significant support level that has some historical relevance.
The level of 82,833 set the high back in May. In the week after that high, a series of lower-highs led to a breakdown and, eventually, a test of the 60k handle in July.
More recently, and perhaps more importantly, is how the level came into play last week. As gold sold off into and around the Fed’s rate hike, Bitcoin continued to power-higher, setting a fresh eight-month-high the week after the move. At that point, with a heavy bullish bias there was ample motive for sellers to drive a sizable pullback. But it was the 82,833 level where bulls took a stand, establishing a higher-low that, eventually, led to another rally.
Bitcoin (BTC/USD) Daily Price Chart
Chart prepared by James Stanley; data derived from Tradingview
Bitcoin Big Picture
From the weekly chart this is an important spot and an important time for BTC/USD. The breakout is still fresh and while invalidation doesn’t exist until 75k, the weekly bar closing as bearish as it looks now would be foreboding, and would highlight the potential for a deeper drawdown to the 80k level.
BTC/USD Weekly Chart
Chart prepared by James Stanley; data derived from Tradingview
Bitcoin Structure
What made the prior support test last week so important is how buyers responded to it – posing a series of higher-lows as the level was defended. I’ve added a green trendline to illustrate that.
For the more recent test, it’s still early and from the four-hour below, we have just one test of that price at 82,833. But – given the recent range the door is open for continuation. And if there is a break of support, deeper support potential exists at the 82,047 or the 80k handle just below that. If 80k is lost, then 75k becomes the big marker as that held a massive spot back in September, just before the FOMC rate hike.
Losing that opens the door for a steeper slide and that would be seen as a large failure from bulls.
Bitcoin Four-Hour Chart
Chart prepared by James Stanley; data derived from Tradingview
--- written by James Stanley, Senior Market Analyst, Global Macro
