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Cautiously Bullish? $6,000 in Play as Bitcoin Price Stages Sharp Recovery
The price of bitcoin is roaring once again today, rising over $500 on a strong recovery from yesterday's lows.
Updated Sep 14, 2021, 1:56 p.m. Published Oct 19, 2017, 12:30 p.m.
Having witnessed a solid recovery from the low of $5,100 in the last 24 hours, bitcoin is once again trading on the front foot and looking northwards.
At press time, the bitcoin-US dollar (BTC/USD) exchange rate was roughly $5,700. As per CoinMarketCap, the cryptocurrency has gained 6.47 percent in the last 24 hours. Week-on-week, BTC is up 4.77 percent, and on a monthly basis, it is carrying 45.7 percent gains.
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So, is the bitcoin price eyeing $6,000? Strong dip demand would seem to suggest so.
The drop to $5,100 witnessed yesterday turned out to be healthy correction as expected, and the subsequent 'V' shaped recovery could be taken as an indication cash is waiting on the sidelines for a good opportunity. Further, the potential (or perceived) benefits of holding bitcoin ahead of the hard fork in November could also bring in more buyers, leading to higher prices.
However, short-term overbought technical conditions persist. Therefore, the price action analysis suggests there is merit in being 'cautiously bullish' on bitcoin.
Daily chart
The above chart shows:
- Wednesday's candle was a 'Dragonfly Doji.'
- The relative strength index is still overbought.
- Higher lows pattern (as indicated by a rising trend line & Wednesday's sharp rebound from $5,100) is still intact.
View
'Dragonfly Doji' is candlestick pattern with a long lower shadow (also known as long wick or long tail or long leg) and without a real body and upper shadow. The long tail indicates dip demand, while the dragonfly doji indicates indecision among traders.
In this case, the price action on the following day generally decides the short-term outlook. The fact that bitcoin is well bid today indicates the bulls have been able to carry forward the strong move from the low of $5,100. Thus, prices may jump above $6,000 if the bid tone remains intact over the next few hours.
On the other hand, a negative price action today would confirm a bearish doji reversal. A bullish-to-bearish trend change is likely only below $5,000 (rising trend line support).
Sky ladder image via Shutterstock
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
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- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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