Minutes ago as of the time of this article’s writing, Bitcoin breached a daily high, rallying past $7,000 to near $7,050.This meant that from Sunday’s lows, BTC is up 5%, echoing gains seen in the stock market, despite a worsening coronavirus outbreak.
What’s Next For Bitcoin?
Right now, all analysts have their eyes on notable candle closes, like the six-hour, daily, or weekly. The rally aforementioned is Bitcoin’s fifth attempt at retaking $7,000 on a four-hour candle basis, with all four attempts previously failing, suggesting that $7,000 is a key psychological and technical resistance.
It failing to retake this level, which some analysts have since dubbed a “decision point” due to its importance, could indicate impending bearish pressure for the crypto market.
As reported by NewsBTC on Sunday, Nik Patel a markets analyst and the author of the crypto trading bible, “An Altcoin Trader’s Handbook” suggested that BTC failing to surmount $7,000 on a medium-term time frame will likely lead to a retracement to $5,680, which would be a 20% drop from $7,000.
The chart accompanying his sentiment indicates that $7,000 was the weekly high seen last week, making it important from a technical analysis perspective.
The call for a retracement has been echoed by another popular crypto trader, who shared the below image on April 4th, predicting the ongoing “sweep” of the local highs around $7,000. What comes next, they explained, will be a 7% retracement back to $6,500, which would kill the bullish momentum that has been forming over the past three weeks once and for all.
However, if Bitcoin manages to decisively reclaim $7,000, further upside is likely. A chart from trader Filb Filb indicated that Bitcoin retaking $7,000 would likely support a rally towards $8,000, at which point it is likely to be rejected due to the “resistance cluster” in that region.
At Least The Bottom Is In
While there seems to be an opportunity for traders to catch some short-term downside, a consensus is building that the long-term bottom for the Bitcoin price was established in March.
Utilizing two indicators, on-chain analyst Willy Woo observed that the way in which Bitcoin’s mining ecosystem is developing gives credence to the sentiment that BTC won’t fall any lower than $3,800, March’s lows:
- Firstly, the Hash Ribbons moving averages of the hash rate have started to recover, which is a “reliable bottom signal.” The last time the Hash Ribbons looked similar to as they do now was in December 2019, at the $6,400 bottom, and in December 2018, the $3,150 bottom.
- And secondly, the Miners Energy Ratio, “the ratio between Bitcoin’s market cap to its energy consumption is in the buy zone” after briefly breaking into the “extreme buy zone” during March’s crash. The last time this ratio entered the extreme buy zone was months before the previous halving, prior to the 4,000% rally to $20,000.