Bitcoin (BTC) price analysis 7 Feb: Is a rally to $48,000 likely?

Bitcoin could gradually move up in the next few days. Should you be booking profits?

Bitcoin made a strong comeback on 4 February, after the sharp pullback in US tech stocks. According to the analytics firm IntoTheBlock, “bitcoin’s correlation vs the Nasdaq 100 reached its highest level since April 2020”. 

Ed Hindi, chief investment officer of the Swiss-based cryptocurrency hedgefund Tyr Capital, also believes that bitcoin’s volatility has been due to “a fundamental misunderstanding of it as an asset class”. 

He told Reuters: “When valuations on the Nasdaq fall, misguided institutional investors start liquidating bitcoin positions en masse as if it were a tech stock.”

Michael Cembalest, chairman of market and investment strategy at JP Morgan Asset and Wealth Management, said in a report titled ’The Maltese Falcoin: On Cryptocurrencies and Blockchains’ that bitcoin’s emergence is due to the massive “confidence void” created by central banks and treasuries.

However, Cembalest pointed out that bitcoin is concentrated in the hands of a few entities, with just 2% of bitcoin holders owning 72% of its value. This could be one of the reasons for its sharp volatility. In comparison, 10% of US households own 70% of the national wealth. 

The recent correction in bitcoin from its all-time high does not seem to have shaken the long-term holders. Coindesk pointed to data which shows that long-term wallets have seen the addition of 100,000 bitcoin since December, indicating that investors have used the recent dip in prices to accumulate more coins.

Michael Saylor, CEO of business intelligence provider MicroStrategy, said on Yahoo that the time horizon for his bitcoin investment is “a decade or more”.

Will bitcoin go up and start a new uptrend, or could higher levels again attract selling by the bears? Read our BTC price analysis to find out. 

Bitcoin weekly chart
Bitcoin weekly chart – Credit: Currency.com


Bitcoin price technical analysis: weekly chart

BTC’s price extended its recovery for the second consecutive week, rising 11.91% to finish at $42,420.05. The BTC/USD pair could now rise to the moving averages, where the bears are expected to mount a strong defence.

If the price turns down from the moving averages, it will suggest that sentiment remains negative and traders are selling on rallies. The bears will then attempt to pull the price back below the psychological level at $40,000.

If they do that, the pair could drop to $36,270.35 and then retest the recent low at $32,929.95. A break below this support could signal the resumption of the downtrend.

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Conversely, if bulls thrust the price above the moving averages, the pair could rally to the stiff resistance at $52,122.15. The bulls will have to clear this hurdle to create a possibility for a retest of the all-time high.

The bitcoin price analysis shows that the bulls are attempting a recovery which is likely to face stiff resistance at the moving averages. 

Bitcoin daily chart
Bitcoin daily chart – Credit: Currency.com


Bitcoin price technical analysis: daily chart

BTC’s price soared above the 20-day exponential moving average (EMA) on 4 February, which was the first sign that bulls are attempting a comeback. 

Although bears tried to stall the rally at the 50-day simple moving average (SMA), the bears did not give up much ground. This suggests that traders are holding on to their position as they anticipate higher levels in the short term. 

The relative strength index (RSI) is in the positive territory, indicating that the momentum favours the buyers. If bulls push and sustain the price above the 50-day SMA, it will signal a possible change in trend.

There is a minor resistance at $44,453.20, which if crossed could clear the path for a possible rally to $48,600 and then to $52,000.

Bitcoin: buy or sell at current levels?

The bitcoin price analysis shows that the bulls have made a strong comeback. If they sustain the price above the 50-day SMA, it will signal that a bottom could be in place. The pair could then start its journey toward $48,600.

This positive view will invalidate in the short term if the price turns down and plunges below the 20-day EMA.  

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. 

Further reading

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