- Bitcoin is starting to look really good in terms of price action.
- Altcoins are doing well too, but may not be as strong as bitcoin
- USDC gained its peg, suggesting that a bitcoin recovery may be underway afterall
- The economic failures and bank runs may be a factor that helps Bitcoin’s bullishness in the long run.
The bitcoin charts are starting to look much better than they did only a few days ago. Although nothing is confirmed yet, the price outlook of the flagship cryptocurrency (and therefore the entire crypto market) appears to be on the path to recovery.
And as far as price movement goes, these are one of the most encouraging price action signs the cryptocurrency has shown in more than a year.
In this article, we attempt to analyze the price action of Bitcoin from a multi-timeframe perspective, in a bid to determine where it might be headed over the next few days, weeks or months.
Is this the start of a massive recovery, or is this one of the positive signs that turn up at intervals, and ultimately amount to nothing?
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Let’s find out.
Bitcoin Top-Down Analysis
Bitcoin hit its monthly support level of around $19,144 (blue line) in March this year after the three-bank collapse last week.
However, the cryptocurrency bounced off this level fairly quickly, rallying to the $23,176 resistance (red line) and even moving past it in an impressive turn of events.
On the weekly timeframe, the current candle has three days left to close.
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Over the course of the previous week, Bitcoin gave investors a scare when it plunged below the weekly support of around $21,160. However, the cryptocurrency got back up almost immediately and appears to have just broken out of a range between $23,176 and $21,160.
This is good because it opens up the door to a $30,000 – $32,000 bitcoin.
From a daily perspective, Bitcoin appears to have been highly volatile this week.
The cryptocurrency went from all the way below $20,000 to the $26,000 zone with five out of six massive green candles.
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Initially, bitcoin was expected to experience a pullback from the $25,312 resistance to the $23,176 support this week. However, the cryptocurrency has defied all odds and has broken through $25,312 to $26,597 where it now sits.
Rerun of the 2008 Banking Crisis?
In essence, the series of macroeconomic issues, rate hikes and the bank runs that have plagued the last few months have sparked fears among investors, who wondered if the 2008 banking crisis is on its way to happening again.
In 2008, the banking crisis happened when many large banks and financial institutions in the United States started to fail. This crisis caused a ripple effect that spread to other countries and led to a global economic recession.
However, it is important to keep in mind that a recurrence of this scenario has little to no bearing on Bitcoin because the cryptocurrency itself was made specifically as a solution to the failure of banks and other traditional financial systems.
If anything, these bank runs serve to increase the bullish potential of Bitcoin and may mean that the $30,000 – $35,000 price targets are only the beginning.
Bitcoin vs Altcoins
Like Bitcoin, the altcoins (including ETH) have been doing well over the last few days. However, Bitcoin appears to be leading this rally and has shown considerable strength in relation to Ether, the second-largest cryptocurrency by market capitalization.
As evidenced by the ETH/BTC pair chart above, there appears to have been a breakdown amid the market explosion to the upside this week.
This indicates that while Ethereum may have moved 28% to the upside over the last week according to data from CoinMarketCap, the cryptocurrency is still suffering in terms of strength, compared to Bitcoin.
To this narrative, it is important to be prepared for possible strength on bitcoin, which doesn’t translate to strength in altcoins.
Historically, the best bitcoin rallies are usually the solo rallies the cryptocurrency does.
The same is true for Litecoin, despite the cryptocurrency moving 22% to the upside over the last seven days.
In conclusion, while $30,000 – $35,000 is highly possible for Bitcoin, nothing is guaranteed as far as altcoins go.
Bitcoin Versus Dogecoin
In summary, Dogecoin does not look very good compared to Bitcoin.
Keep in mind that dogecoin is still one of the top 10 cryptocurrencies on the market, and has also moved by an impressive 17.2% to the upside over the last seven days.
However, it might be helpful to keep in mind that the better part of the meme coin’s initial success was influenced by billionaire entrepreneur Elon Musk’s endorsement.
Over the last few months, Musk himself has lost the larger part of his influence over the crypto market. This, in turn, has created a predictable future for the already overpriced memecoin.
Back in the heat of the last crypto bull run in 2021, everyone bought Dogecoin. And when the bear market hit, the cryptocurrency lost as much as 89.80% of its initial value. This means that a large part of the investors who bought in the meme coin’s prime is currently at a loss.
According to the snapshot above, 74% of the current Dogecoin HODLers bought their holdings more than a year ago (in the memecoin’s prime), and 33% of the total amount of orders are currently at losses, while 11% are at break even.
More On USDC
When Circle, the enterprise that issues USDC, disclosed that it had $3.3 billion in exposure to Silicon Valley Bank (SVB), which had been shut down by regulators last week, it caused a wave of panic that spread throughout the cryptocurrency market.
A wave of USDC shorts spread throughout the decentralized finance (DeFi) ecosystem as a result of these fears. A pool on the decentralized exchange Curve made up of three stablecoins that were equally weighted became unbalanced as a result of the skewed supply of USDC.
As expected, this became a perfect time to “buy the dip”.
The biggest amount of stablecoin outflows from Binance since the FTX crash in November was brought on by traders who started to withdraw stablecoins from centralized exchanges and swap their tether (USDT) for USDC on decentralized exchanges. According to Crypto Quant, USDT was taken out of Binance for a total of $2.8 billion over the course of a single day.
At the end of the day, USDC regained its peg and increased to $1 on Monday as Circle strengthened its banking relationships to guarantee that each USDC token was backed by actual dollars.
The durability of USDC in what appeared to be a very desperate scenario exemplifies the cryptocurrency traders’ willingness to take risks.
In essence, the events of the last week show three things:
- That it may not be a good idea to keep all one’s holdings in one place.
- That things may not be so bad in the crypto market after all
- It is always best to diversify one’s holdings, whether stablecoins or otherwise.
In Summary: Bitcoin In Perspective
Bitcoin had been trading in a descending channel since 20 February and began to descend steeply after hitting a $25,256 high at the end of February.
The cryptocurrency hit the bottom of the channel at around $19,582 last week after the SVB bank crisis and began to rise almost immediately.
After rising to the top of the channel within a three-day span, the cryptocurrency broke through the resistance around $24,000, reversed for a retest, and now appears to have rebounded to the upside.
Things look good for the cryptocurrency on the daily chart as well, indicating a breakout from an ascending wedge as illustrated below.
At the same time, nothing is guaranteed yet from this perspective because Bitcoin first has to close with a daily candle above this zone for the expected rally to the $30,000 zone and beyond.
In all, the cryptocurrency daily RSI has yet to breach the overbought zone and appears to be showing considerable potential for another move to the upside.
At the end of the day, the question becomes: Is this the start of a huge bitcoin recovery?
Disclaimer: Voice of crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.