Bitcoin is Rallying, but is it Sustainable?

Bitcoin is rallying this week, breaching its highest level in a month, but whether its sustainable and a full bull market remains in…

Bitcoin is rallying this week, breaching its highest level in a month, but whether its sustainable and a full bull market remains in question.

Bitcoin hit above $23,660 as of this writing. This is still down 65% since its record high in November but its highest level since June 13.

“Bitcoin extended gains from its past two sessions, jumping almost 5% Wednesday to as high as $24,210, the loftiest level since June 13, which raised investors’ hope for a sustained rally, after months of volatility in the crypto markets.”

Investors thought the mid-June rally was sustainable but it wasn’t, owing to a confluence of factors. This time there could be more tail winds.

For instance, right now the crypto market is benefiting from investors lowering expectations for the Fed’s peak interest rate to around 3.75% around the end of the 2022.

Equities likewise have seen big gains, with companies reporting earnings that beat forecasts, which in turn relieved investors worried about inflation and higher production costs. This carried over to digital assets.

Still, industry analysts warn that they want to see a higher ceiling before they consider this a long-term trend.

“Katie Stockton, founder and managing partner at Fairlead Strategies, echoed the point. ‘The rally is strong, but with short-term overbought conditions having returned already, we feel it is premature to call it the start of a lasting reversal,’ Stockton wrote.

“From the technical perspective, a sustained relief rally would be indicated by ‘a breakout above cloud-based resistance near $25,000, a weekly MACD ‘buy’ signal and weekly stochastics above 20% in an oversold upturn,’ according to Stockton.”

Others think it has to beat even higher resistance levels to establish a true bull rally.

As support had begun to build up at this previously hard-to-beat resistance level, the bears had moved their defense position further. Presently, bitcoin faces the most opposition when it inevitably makes its break above $25,000. The resistance at $25,500 is so prominent that any sign of sell-offs will turn the tide in favor of the bears.

An even more important point is at $28,000. This is because the price point was a yearly low level in 2021. As such, it has become a level to hold for both bulls and bears, depending on what direction they wish to drag the cryptocurrency in.