Bitcoin (BTC) price analysis 14 Feb: Could the rally resume?
Bitcoin (BTC) could rebound off the current levels
Two macroeconomic factors may have stalled bitcoin’s recovery last week, as investors sold off assets perceived as risky.
The first was the release of US inflation data, which revealed that the headline figure had soared to 7.5% year-on-year, recording its highest increase since February 1982.
The second was the rising tension between Russia and Ukraine, which according to US national security advisor Jake Sullivan could lead to a possible invasion of Ukraine by Russia. However, one minor positive is that the damage to bitcoin was far less than the pain in US equity markets, which sold off on 10 and 11 February.
American fund manager and investor Bill Miller, who was an early investor in Amazon, said he owned a large quantity of bitcoin. Miller said he believes bitcoin is “like an insurance policy” against financial calamities.
“Bitcoin is insurance against financial catastrophe as we see in Lebanon, or in Afghanistan, or many of these other countries where we saw [that] around the time of the pandemic,” Miller said, according to Business Insider.
It is not only individual investors who are adding bitcoin to their portfolios. KPMG in Canada also announced that it has purchased bitcoin and ethereum for its corporate treasury.
Benjie Thomas, Canadian managing partner, advisory services, KPMG in Canada, said: “This investment reflects our belief that institutional adoption of crypto assets and blockchain technology will continue to grow and become a regular part of the asset mix.”
Contrary to several bullish voices, analysts at JPMorgan said that bitcoin’s volatility is four times that of gold, which gives it a fair value of $38,000. If the volatility shrinks to three times in relation to gold, bitcoin’s fair value will climb to about $50,000.
Will bitcoin go up after a minor pullback, or could the correction deepen further? Read our BTC price analysis to find out.
Bitcoin price technical analysis: weekly chart
BTC’s price formed a gravestone Doji candlestick pattern last week, showing that the bears are aggressively defending the 20-week exponential moving average (EMA). The BTC/USD pair dipped marginally by 0.83% to finish the week at $42,069.05.
The downsloping 20-week EMA and the relative strength index (RSI) in negative territory indicate a minor advantage to the bears. If the price fails to recover quickly, the pair could slide to $36,270.35.
What is your sentiment on BTC/USD?
Alternatively, if the price rises from the current level, bulls will again attempt to drive the pair above the moving averages. If they manage to do that, it will suggest that the downtrend could be over.
The pair could then rally to $52,122.15, where the bears are expected to mount a strong defence. The bitcoin price analysis shows that bulls are facing strong selling pressure near the moving averages, indicating that the trend remains negative.
Bitcoin price technical analysis: daily chart
BTC’s price broke above the 50-day simple moving average (SMA) on 7 February, but the bulls could not build on this advantage. The pair turned down from $45,855.75 on 10 February, indicating strong selling by the bears.
The price has dipped to the critical support at the 20-day EMA. If the price rebounds off this level, it will suggest that sentiment has turned positive and traders are buying on dips. The bulls will then try to push the price above $45,855.75 and resume the upward move.
The pair could first rise to the psychological level at $50,000 and thereafter to $52,122.15. The moving averages are on the verge of a bullish crossover and the RSI is in positive territory, indicating advantage to buyers.
This positive view will invalidate in the short term if the price breaks and sustains below the 20-day EMA. The selling could intensify on a break below $40,000.
Bitcoin: buy or sell at current levels?
Our bitcoin price analysis shows that the bulls are attempting to defend the 20-day EMA. If they succeed, the pair could challenge the overhead resistance at $45,855.75.
A break above this level could signal a further rally to $50,000. On the downside, a break below $40,000 could aggravate selling.
The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision.