As Bitcoin continues its recent rally, Jon Cotton (pictured), Head Strategist at global cryptocurrency prime brokerage BCB Group, has commented on why this latest move may point to a sustained move upwards for the currency in the medium-term.
“As trading volumes increase to sizeable levels and Bitcoin breaches our previously noted important resistance level of USD7740, according to our analysis the recent rally has put the currency back above an uptrend dating back to November. Bitcoin has also broken over its 50-day moving average for the first time since April, and finally broken north of the downtrend from the December high. In our view, this is one of the most promising moves we have seen for the currency since the December top.
“We’re not out of the woods yet though: in terms of Relative Strength Index (a momentum indicator that measures the magnitude of recent price changes), we have moved to overbought levels, which implies that a short-term ‘top’ is imminent during this rally.”
Cotton also notes that other cryptocurrencies are building to a possible breakout. “Ethereum, Litecoin and Ripple XRP’s recent moves, in terms of our proprietary analysis, are all at the apexes of triangle formations – these reduced trading ranges may portend large moves. In our view, should BTC’s rally hold above USD7700, bulls may make a new attempt on the all-important 200 day moving averages just above on each of these currencies.
“Until that point, whilst we remain in bear market territory formally, Bitcoin’s recent moves may signify the early stages of a transition from bear phase to sideways/bullish, albeit with battles ahead.”