- Bitcoin’s price is eyeing an imminent return to $10,000.
- A key technical formation suggests a prolonged bull market is possible.
- Bitcoin-gold correlation continues to strengthen.
After rallying to five-month highs on Friday, bitcoin’s eventual return to $10,000 and beyond appears highly likely.
The bullish bias has a lot to do with the technical charts after bitcoin achieved an important milestone last week.
Bitcoin’s Golden Cross
The bitcoin price has been gravitating towards $10,000 for the better part of a week now. On Friday, the number one cryptocurrency peaked at $9,871.30 on Gemini, the highest since September. It has since consolidated below $9,800, enough for a 5% weekly gain.
At current values, bitcoin has a total market capitalization of $178 billion. That’s an increase of nearly $50 billion since the start of 2020.
The sustained upward pressure allowed bitcoin to complete a golden cross formation on the daily chart – one of the most bullish signals in all of trading. A golden cross is when the short-term moving average (in this case, the 50-day exponential moving average) moves above the long-term moving average (such as the 200-day EMA).
As the following chart illustrates, this key formation was completed Jan. 31 when BTC pushed north of $8,200. After a minor correction, bitcoin printed a long green candle followed by another smaller one.
While predicting bitcoin’s trajectory is notoriously difficult, the daily chart suggests further upside is likely.
Altcoin Market Strengthens
Bitcoin is the undisputed leader in the cryptocurrency space, accounting for 64% of the overall market. This oversized influence usually means altcoins and tokens follow bitcoin’s lead.
But alts have been slowly decoupling from BTC over the past few weeks, as evidenced by explosive (and seemingly independent) rallies for the likes of ICON (ICX), Ethereum (ETH), bitcoin cash (BCH) and bitcoin SV (BSV).
On Friday, the altcoin market cap peaked just below $101 billion, a new six-month high.
Unlike altcoins, bitcoin seems to be convincing more people that it’s a reliable store of value. That’s because BTC and gold – the market’s oldest haven asset – have shown strong correlation in recent months.
Last month, Arcane Research noted that bitcoin’s correlation with gold was approaching four-year highs, or “levels not seen since 2016.”
At the time, the two assets were moving in lockstep with one another over escalating tensions between the United States and Iran.
The two countries have avoided direct conflict, but gold and bitcoin are still trading in the same direction.
While it’s still too early to declare bitcoin “digital gold,” the two assets share many striking similarities. Whether those similarities resonate with hedge funds, portfolio managers and other traditional investors is yet to be seen. In the meantime, bitcoin still enjoys support from digital natives, early adopters, and tech enthusiasts aligned with bitcoin’s philosophical principles.
Disclaimer: The above should not be considered trading advice from CCN.com. The writer owns bitcoin and other cryptocurrencies. He holds investment positions in the coins but does not engage in short-term or day-trading.
Last modified: March 4, 2021 2:40 PM