Bitcoin buyers were active over the weekend as the cryptocurrency broke above the 50-day moving average near $34,000. The intermediate-term downtrend is moving backward, although resistance near $40,000 might cause some profit taking.
Upside momentum is improving after several months of consolidation and multiple oversold readings on the charts. Bitcoin was trading around $38,000 at press time and is up 10% over the past 24 hours. Early Monday, the price climbed to about $39,500.
- The relative strength index (RSI) on the daily chart is approaching overbought levels for the first time since April. This could precede a brief period of profit-taking near the 100-day moving average at $40,000.
- The weekly RSI is not yet oversold, although selling pressure from May is starting to slow.
- Price action is consistent with previous rallies from $30,000 support, albeit more persistent given the break above the 50-day moving average.
- Bitcoin remains in a consolidation phase until price moves above $40,000, which is the top of a two-month range. Initial support is seen around $34,000, which could stabilize a pull-back.
Bitcoin briefly traded above $39,000 for the first time since June 16 and is currently trading its sixth consecutive day in the green.
Prices have continued to rally since July 21, with Sunday’s current price rise representing the largest single daily gain in over six weeks. The world’s oldest crypto is changing hands for around $38,250, having cooled slightly after hitting a monthly high of around $39,850.
Datamish data show a short squeeze appears to have driven prices higher as those betting on bitcoin heading lower had to sell in quick succession to cover. The reason remains unclear.
“This price action is aligning with what we’ve been seeing the past couple of weeks,” said Daniel Kim, head of capital markets at Maple Finance. “Borrowing rates for USD have started to increase from its lows.”
“We’ve also been seeing a significant increase in demand for USDC from institutional borrowers and the sentiment seems to be bullish following the news of Amazon participating in bitcoin,” Kim added.
An unconfirmed single-source story in City A.M. has reported retail giant Amazon is looking to accept bitcoin payments by year’s end and is considering minting its own token by 2022. The retail giant is also seeking a Digital Currency and Blockchain Product Lead, CoinDesk previously reported.
Others argue the rebound in crypto prices is a reaction to a range of good news coming from big tech and finance players from the U.S. markets.
“Most prominently, there were conversations held last week between Jack Dorsey, Elon Musk, and Cathie Wood at the Bitcoin Conference where they talked about where they see bitcoin and cryptocurrencies going with respect to their own organizations,” said Caroline Bowler, CEO of Australian crypto exchange BTC markets.