(Kitco News) – Bitcoin (BTC) bulls were active in early trading on Friday as they looked to make another run at taking out resistance at $66,000, the same region that halted their advance on Wednesday.
Data provided by TradingView shows that after falling below $64,000 on Thursday, BTC consolidated for roughly 12 hours before bulls started to make their move. Around the time the U.S. market opened, bulls began to push the price action, rallying Bitcoin to $65,944 before taking a break due to bearish resistance.
BTC/USD Chart by TradingView
It was the opposite story for stocks, which fell under pressure at the market open following a global IT outage that is being referred to as an ‘unprecedented’ failure in computer systems worldwide. The impact was far-reaching as flights were grounded while banks, telecoms, and media companies, among others, all experienced service disruptions.
While the outage was resolved in short order, with CrowdStrike deploying a patch to fix the glitch – a botched update that affected Microsoft-based systems – investors remained cautious about reentering the market, especially since it has shown signs of a near-term top in recent days.
The major indices also struggled amid a rotation out of tech heavyweights and into small-caps, which investors think will see a bigger benefit from interest rate cuts.
“The S&P 500 is off 1.25% this week, coming into today. If sustained, it would be the largest loss in three months,” said Marc Chandler, Chief Market Strategist at Bannockburn Global Forex. “The NASDAQ is down nearly 2.9% this week ahead of today's session. It would also be the biggest weekly loss since mid-April.”
“Benchmark 10-year yields are little changed. The 10-year US Treasury yield is slightly below 4.20%, off about three basis points this week. The two-year yield is almost flat at 4.47%, a couple basis points higher than a week ago,” he added. “Gold set a record high on Wednesday near $2483 before reversing. It is off nearly $30 today and is approaching the week's low near $2400. September WTI is consolidating quietly between $80.50-$81.35.”
With the ‘up only’ rally in stocks finally pausing as investors look to rotate, many analysts have said cryptos could benefit as traders look for a new source of alpha.
"After a rough few weeks, the markets have stabilized and rebounded strongly,” said Rachel Lin, co-founder and CEO of SynFutures. “Bitcoin is up 10% since last week, and Ethereum (ETH) and the altcoin markets are up around 9%.”
“The German government's end of selling has played a major role in lifting market sentiment,” Lin noted. “Not only has this reduced the selling pressure, but the market is also buoyed by the fact that despite nearly $3 billion worth of additional BTC being sold, Bitcoin has largely remained close to its support level of 57,500.”
“The German government held around 50,000 Bitcoin at the beginning of June,” she said. “Over a span of 24 days, from June 19 to July 13, they sold off their entire holding through OTC and open market trades worth $2.89 billion. This amounts to nearly 2,000 BTC of additional sell pressure per day. Despite this, Bitcoin's price today is roughly at the same level as it was when the selling began.”
On Tuesday, Bitcoin’s push higher was halted after it was revealed that the first tranche of BTC from the Mt. Gox estate had been sent to the Kraken cryptocurrency exchange for distribution to creditors, sparking concerns of another large token dump on the market.
“Looking at Mt. Gox, we know the transfer of nearly 140,000 BTC will likely take as much as 90 days. It's unlikely that the creditors will sell the entire holding,” Lin said. “So, for the sake of argument, let's say 80% of it gets sold in the market. That would amount to 112,000 BTC sold over 90 days. If the German government selling over 2000 BTC per day did not have any long-term negative impact on the market, then the Mt. Gox sale of around 1250 BTC per day is unlikely to change the long-term direction of the Bitcoin bull market.”
“We are also seeing an improvement on the fundamentals side,” she added. “The ETH ETF is likely to start trading next week, and Bitcoin ETF inflows continue to remain strong. Additionally, the industry considers the new vice-presidential nominee in the U.S., JD Vance, pro-crypto. If the regulatory overhang in the U.S. is lifted, it will significantly boost the industry's near-term and long-term future.”
Bitcoin traders appear to be anticipating a positive outcome to regulatory developments as BTC “is approaching the top of the 4-month Bull Flag pattern and is technically ready to break above it,” according to TradingView analyst TradingShot. “When it does, expect a parabolic break-out as this will be a bullish structure within a long-term Channel Up (blue) breaking above the All Time High (ATH) trend-line.”
“Bull Flags are a norm,” he said. “Similar Bull Flags that broke above the exact same level in previous Bull Cycles started exactly what we expect: the Cycle's Parabolic Rally. In fact, you can see on this 1W chart that the Channel Up patterns that started at Cycle bottoms and reached the ATH, all had a number of Bull Flag structures similar to the current one, that were nothing more than short-term Channel Downs. And those Channel Down patterns are what usually scare short-term investors/ traders away and force them into making hasty decisions.”
“The recent correction changes nothing and as the chart shows, BTC is well within its Bull Cycle,” TradingShot said.
“The Sine Waves indicated that we may be another 11-12 months before the Cycle's Top,” he concluded. “Since the previous Cycle Top 'only' reached the 0.786 Fibonacci retracement level of the Fib Channel Up, we could expect this time to go as high as the 0.5 Fib (deceleration), possibly the Theory of Diminishing Returns kicking in. Still, the Target may be at $200,000 at least.”
At the time of writing, Bitcoin trades at $65,7232, an increase of 3.11% on the 24-hour chart.
