Bitcoin price analysis (26 July-1 Aug): will rally sustain?
Bitcoin could turn down from $42,553
Bitcoin started last week on a weak note and dipped below $30,000 on 20 July. While several participants were anticipating the correction would continue, Bitcoin made a sharp recovery in the second half of the week.
The sentiment seems to have turned positive after Elon Musk, chief executive of Tesla and SpaceX, said during the B Word cryptocurrency conference that he holds bitcoin along with ethereum and dogecoin and has no plans to sell his bitcoin in the near future. The BBC reported that Musk added: “I would like to see bitcoin succeed."
During the same conference, Cathie Wood, founder, CEO and CIO of ARK Invest, said that her mentor, the economist Arthur Laffer, believed that Bitcoin’s market capitalisation has the potential to equal the total US monetary base.
The total US monetary supply, according to Federal Reserve data, was more than $6tn as of May. Bitcoin will have to rally to about $320,000 to reach that landmark.
The sentiment received a further boost when an anonymous insider told the London business newspaper City A.M. that Amazon is planning to start accepting bitcoin payments by the end of this year and is considering releasing its own token in 2022.
Many investors are worried about bitcoin’s short-term prospects, but Mike McGlone, senior commodity strategist at Bloomberg Intelligence, remains bullish. Eric Balchunas, Bloomberg’s senior exchange-traded fund (ETF) analyst, said in a tweet: “Our crypto analyst Mike McGlone says bitcoin more likely to hit $60k than $20k based on historical price patterns.”
After the recovery, is it time to book profits or could the relief rally extend further? Read our Bitcoin price trend analysis to find out.
Bitcoin price technical analysis: weekly chart
Bitcoin’s price plunged to $29,286.60 last week but staged a recovery to close at $35,421.60, clocking gains of 11.41% on the previous week’s close. This suggests that bulls are aggressively accumulating at lower levels.
The 20-week exponential moving average (EMA) has started to flatten out and the relative strength index (RSI) has risen to the midpoint, suggesting that sellers are losing their grip.
What is your sentiment on BTC/USD?
The BTC/USD pair has reached the 20-week EMA, which could act as a stiff resistance. However, if bulls do not give up much ground, the possibility of a break above the 20-week EMA increases. If that happens, the pair could rally to the resistance at $41,327.35.
Conversely, if the price turns down from the current level and plummets below the 50-week simple moving average (SMA), it will indicate that bears continue to sell aggressively at higher levels. The Bitcoin price weekly analysis shows the bulls are attempting a comeback.
Bitcoin price technical analysis: daily chart
The bulls aggressively bought the dip below $30,000 on 20 July and the momentum picked up after the pair closed above the 20-day EMA on 23 July. The rally continued and bitcoin’s price closed above the 50-day SMA on 25 July for the first time since 9 May.
This may have forced the bears to cover their positions, resulting in a short squeeze. This has resulted in a sharp rally today, driving the price above the $36,658 resistance.
The wick on the candlestick today indicates that bears are aggressively defending the psychological level at $40,000. If bulls do not allow the price to dip back below $36,658, the upward trend may continue and reach the $41,327.35 to $42,553.25 resistance zone.
On the other hand, if the price turns down from the current level and breaks below $36,658, it will indicate that buying dries up at higher levels. That could keep the pair range-bound between $30,000 and $40,000 for the next few days.
How to trade bitcoin this week
After the sharp rebound, bitcoin could face stiff resistance in the $41,327.35 to $42,553.25 zone. If the pullback finds support at $36,658, it will suggest that buyers are accumulating on dips. That could keep the pair range-bound between $36,658 and $42,553.25 for a few days.
This positive view will invalidate if the price turns down and plummets below $36,658.