(Kitco News) – Bitcoin (BTC) bulls looked to solidify support at $60,000 in early trading on Friday after the top crypto rallied to a high of $62,778 late on Thursday, erasing the losses that resulted after the Japanese yen carry-trade began to unwind last weekend.
“Risk appetite played out in the markets on Thursday, adding over 6.4% to the crypto market's capitalization in the last 24 hours,” said Alex Kuptsikevich, senior market analyst at FxPro. “The capitalization peaked at $2.18 trillion in the morning, the highest since last Friday.”
BTC/USD Chart by TradingView
“In just over 24 hours, the price of Bitcoin rose 14% to $62.6K before falling back to $60K by the start of active trading in Europe,” he said. “The foremost cryptocurrency failed to break above the intersection of the 50- and 200-day moving averages. The ability to close above this at $61.8K could encourage buyers to rally quickly to $67K. A retreat from this level would set up a scenario of a return to the area of the sustained July and August lows near $55.5K.”
“Ethereum (ETH) is trading at $2660, having rallied to a classic 61.8% Fibonacci retracement of the down amplitude from 22 July to 5 August,” Kuptsikevich added. “A death cross has formed on the daily chart, increasing the chances of a downward move under technical pressure.”
ETH/USD Chart by TradingView
“On the other hand, Ethereum is still oversold locally, and financial markets are rallying, attracting bargain hunters to the crypto,” he concluded.
While Bitcoin looks to be on the road to making a strong recovery, the debate around whether the past week's price action was a bear trap or a portend of things to come rages. For John Glover, Chief Investment Officer of Ledn, chart data suggests that higher prices are coming.
“The price action of the past weekend, which followed the general sell-off in risk assets across the board after the disappointing US employment data, had many Bitcoiners worried that we were going to see a big correction,” he said in a note shared with Kitco Crypto. “However the key support at $49k held and we have since bounced nicely.”
“We have formed a flag pattern (blue lines below), which is a bullish pattern in technical analysis,” Glover said. “A break above the upper bound (~$67k) should indicate that we are now on our way to wave 5 (yellow line) of Wave III (orange line), at the $90k area.”
“Often flag patterns break on the third test of the upper bound, so look for a break in the middle to end of September,” he concluded. “Enjoy the ride!.”
According to Yevgeniy Feldman, co-founder of private brokerage firm SwapGlobal, one thing that could help kickstart the next leg higher for Bitcoin is surging demand from hedge funds, which saw Monday’s decline as an opportunity to buy the dip.
“People got extremely liquidated on longs, it was horrific,” Feldman told Bloomberg. “But the US hedge-fund and institutional participants that trade options via OTC desks on Monday and Tuesday restarted making bullish options bets by buying call spreads on Solana and Bitcoin.”
He said that one of the driving forces behind the rebound has been a spike in demand for Bitcoin on Coinbase, as evidenced by the bid-to-offer ratio, which shows that the total amount of commitments to buy Bitcoin is notably higher than those looking to sell.
“Such imbalances indicate that there is a tremendous amount of waiting buyers at $49,000 and below,” Feldman said.
While data from offshore exchanges shows that traders have bought more put options than calls in recent days, suggesting a bearish sentiment as it shows they are hedging against a lower price, Ravi Doshi, the head of markets at FalconX, said the long-term outlook for Bitcoin remains bullish.
“While skews heavily favor puts in the front of the curve, post (the US presidential) election skews remain to the call even after the precipitous sell-off,” Doshi said. “As has been the case for most of the year, traders continue to expect a bullish back half of the year in Bitcoin.”
Looking beyond the crypto market, stocks have seen some minor selling pressure in early trading on Friday following a tech-led bounce back on Thursday.
“Sentiment has become more positive following a strong tech-led rally yesterday which brought significant gains for all the US majors,” said David Morrison, Senior Market Analyst at Trade Nation. “So, the question is how the market now behaves going into the weekend?”
“It’s certainly been a positive start,” he said. “Yesterday’s Unemployment Claims was just one report in an otherwise empty desert. But that increased its importance, especially given some weak labor numbers of late, rounded off by last week’s poor payroll data, together with the unexpected uptick in the Unemployment Rate.”
“Ensuring full employment is, of course, one half of the Fed’s dual mandate,” Morrison noted. “The other half comes next week when we have updates on the PPI and CPI on Tuesday and Wednesday respectively. Should the CPI continue to show downside progress towards the Fed’s 2% target, then that should help support equities on the increased probability of a 50 basis point cut at the next monetary policy meeting in September.”
At the time of writing, Bitcoin trades at $59,870, an increase of 0.37% on the 24-hour chart.
