After China hinted it is likely to liberal monetary policy, the price of bitcoin soared beyond $41,000, surging with stocks.
On Thursday, the largest cryptocurrency gained 0.6 percent to $41,500, marking the second consecutive day of gains. If Bitcoin can break over its 200-day moving average, which is just around $48,000, Katie Stockton, co-founder of Fairlead Strategies LLC, believes it is ready for a short-term bounce to as high as $51,000.
Stockton stated, “We expect an oversold bounce and a higher low.”
This year, Bitcoin has generally remained at the $35,000 to $45,000 level. Concerns about monetary tightening sparked a plunge of as much as 19 percent in risk assets after a short breakthrough to touch the 200-day moving average in late March. The token’s connection with big technology equities hit a new high during that time.
On Thursday, the closer relationship between crypto and equities worked in crypto’s favour, as currencies closely mirrored gains in Asian stock markets. The State Council of China announced on Wednesday that it will “intensify financial support to the real economy, particularly sectors and small companies that have been heavily impacted by the epidemic.”
“Bitcoin looks attractive to buy dips after falling to test a nearly three-month trend connecting prior lows since early January,” said Mark Newton, managing director and head of technical strategy at Fundstrat. “Over the following week, the token should rally, with upside goals around $43,750 to $44,200, which appears to be the first substantial upside target,” he said.
Due to Bitcoin’s difficulties, so-called altcoins like Cardano, Avalanche, and Solana have lately outperformed it. Even the second-largest token, Ether, has increased by 24 percent in the last month, compared to Bitcoin’s 7 percent increase.
Both Stockton and Newton expressed concerns about the long-term viability of Bitcoin’s recovery. The recovery will almost certainly be short-lived, according to Newton, who added that “moving back above $48,248 would be required to predict the start of a fresh multi-week or multi-month rally has begun.”
According to Stockton, if Bitcoin falls below $40,000, it risks slipping to a “secondary support” level of around $27,200. Since December 2020, Bitcoin hasn’t traded so low.