With a notable 65 basis points increase this week, Bitcoin (BTCUSD) has continued its upward momentum, marked by back-to-back weeks of gains.
The recent approval of the spot Bitcoin ETF by the Securities and Exchange Commission (SEC) has further propelled Bitcoin into the mainstream, signalling a broader acceptance of cryptocurrencies within traditional financial markets. Notably, BlackRock’s spot Bitcoin offering, The Shares Bitcoin Trust (IBIT), has seen remarkable success since its January 11 launch, attracting an impressive $3.9 billion in inflows, placing it among the top of all US-issued ETFs. This influx of capital highlights a growing appetite for cryptocurrencies as investors seek exposure to this emerging asset class.
However, despite the positive momentum, Bitcoin faces challenges from a resilient U.S. Dollar and tempered rate cut expectations. The recent robust Nonfarm Payrolls data has diminished expectations for a rate cut in March, down to a probability of 20.5% compared to nearly 70% a month ago, bolstering the Greenback. The likelihood of interest rates remaining higher for longer could potentially divert capital away from Bitcoin towards high-yielding and safe haven assets such as U.S. bonds, presenting a formidable obstacle to Bitcoin’s ascent.
Technical
Bitcoin has experienced a notable rebound after encountering downward pressures amidst a resilient Greenback.
The price faced resistance at the 49102.29 level, triggering a downturn. However, support emerged at the 38501.00 level amid oversold RSI conditions, halting the downward momentum. Subsequently, BTCUSD surged above its 100-day moving average, hinting at a potential uptrend formation. Yet, the 50% Fibonacci Retracement level acted as a barrier, with overbought RSI conditions initially impeding further upside momentum.
Market sentiment appears cautious, with buyers initially stalled by the 50% level. A reversal could occur if sellers reemerge, potentially retesting the 38501.00 level. Conversely, a breakout above the 50% level, especially on high volume, could propel BTCUSD towards the 49102.29 resistance level if upside momentum prevails.
Summary
Bitcoin’s recent surge, bolstered by ETF approval and increased institutional interest, faces challenges from a strong U.S. Dollar and tempered rate cut expectations. Technical analysis reveals resistance at 49102.29 and support at 38501.00 levels, with the market’s reaction to the 50% Fibonacci Retracement level potentially influencing sentiment.
Sources: CME, Reuters, Cointelegraph, TradingView
Piece Written By Nkosilathi Dube, Trive Financial Market Analyst
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