TL;DR Boom! A sustainable ‘Boom’? Well, that’s the 64,000 BTC question.

As is so often the case, bitcoin has just confounded many traders by doing the opposite of what they thought was about to happen. With almost all indicators bearish, another move downwards looked likely. In fact, what we’ve seen over the last day and a half is a dramatic move to the upside, almost touching that crucial $4,000 level. The rally has stalled – so far – at $3,955 (Bitstamp).

BTC is now trading above that very significant 50-day moving average, and indeed above the 100-day. It’s still some way off the 200 MA we discussed yesterday. And, after such a stellar uptick, it’s not surprising that the RSI is way into the overbought zone on the 4h, and touching overbought on the one day.

But what about the bigger picture? Has anything really changed from a chart perspective?

The answer to that is a very definite ‘Maybe’. There are causes for hope. That move does appear to have broken the downward-sloping resistance line (just) that has been in play since December, seeing multiple lower lows. Yesterday, the price closed more or less on that line, so it’s not conclusive – plus it coincides with the 100-day MA, so there’s strong resistance here. What we would really want to see is a daily close today above it, at the very least, and ideally a sustained move and close above the $4,200 resistance zone. At this point, it’s likely that the market will need to take a breather and consolidate, if it is to move higher.

We also need to bear in mind the relatively low volumes. This doesn’t look like a bottom – at least, not the kind of bottom bitcoin is used to carving out. We also need to remember the number of shakeouts and stop hunts we have seen, with whales waiting for the shorts to build up before liquidating them in the low-volume conditions; this might be a variation on that, with the opposite move coming once enough optimism has returned. But for now, we’ll take it and await developments with interest!

In the wider crypto world, one piece of news that’s been gaining some attention is the export deal that Argentina and Paraguay have settled in bitcoin. It was only a small amount, a barely-more-than-symbolic $7,100 worth of agricultural supplies. But that sets a massive precedence for the use of bitcoin as an international reserve currency of settlement, especially in countries that do not have a viable local currency.

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