Bitcoin resuming the downside following fresh parabolic highs
- Bitcoin adds gains to the 300% advance seen in 2020.
- The US dollar can be expected to struggle and fuel demand for risky assets such as cryptocurrencies.
In a parabolic move, the price of the world’s most popular cryptocurrency on its 12th birthday has traded as high as $34,800 on Sunday with almost all other markets closed over the first weekend in 2021.
Bitcoin surged by more than 300% in 2020 and has now added more than 50% since crossing $20,000 just two weeks ago, gaining over 20% over the past week.
As typical of the crypto asset, it has plunged to as almost as low as $30K amid profit-taking but bulls have stepped back to the plate on a classic buying of the dip, resulting in fresh highs to start the new week in Asia.
The bearish sentiment towards the dollar continues and is underpinned by market expectations that the Fed will maintain an ultra-accommodative monetary policy for an extended period of time.
With the positive news regarding coronavirus vaccines, the dollar can be expected to struggle which continues to fuel demand for risky assets such as cryptocurrencies.
BTC/USD technical analysis
From a technical perspective, however, the price is now below old support turned new resistance structure and is retesting the level.
A break to the downside below the 10 moving average on the 4-hour chart and to the old lows will firm up a 50% mean reversion at 32,705.
This too would leave a bearish head and shoulders pattern on the carts raising prospects of a continuation to the downside in what would equate to a consolidation of this parabolic rally on the daily charts.
4-hour chart
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Daily chart
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Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
