Bitcoin price action currently remains within a confluent zone, formed between Fibonacci retracement levels of the 2020-2021 move. With the adoption of the major cryptocurrency by PayPal in October last year, demand for virtual currencies soared, resulting in a break of 2017 levels and a series of new highs into 2021 trade. However, as larger institutions continue to investigate the possibility of adopting BTC/USD as an additional payment method, the limited supply of coins in circulation have provided Bitcoin with characteristics akin to Gold, Silver, and other safe-haven assets, gaining popularity as a hedge against inflation and US Dollar weakness.

BITCOIN (BTC/USD) TECHNICAL ANALYSIS

Although the beginning of the week looked relatively promising for Bitcoin bulls, risk of more stringent regulations and rising bond yields have hindered further gains, providing bears with an opportunity to push prices lower. Since reaching a new high on 21 February 2021, upward momentum faltered, resulting in a depreciation of approximately $10,000 over the next two weeks. Now, although bulls are eager to regain control of the trend, bears are persistent to break below current support, formed by the 23.6% Fibonacci retracement level of the 2020 – 2021 move, at $45,463. For now, the Commodity Channel Index (CCI) and the Moving Average Convergence/Divergence (MACD) remain in oversold territory on the weekly chart, while the psychological level of $50,000 remains as resistance.

Bitcoin (BTC/USD) Weekly Chart

Chart prepared by Tammy Da Costa, IG

Meanwhile, on the daily chart, price action remains above both the 50 and 200 Day Moving Average, providing additional support for BTC/USD. The CCI is nearing oversold territory whilst the MACD lingers above the zero line.

Bitcoin (BTC/USD) Daily Chart

Chart prepared by Tammy Da Costa, IG