The probability of a bullish move in bitcoin (BTC) has gone up in the last 24 hours.

To start with, the leading cryptocurrency has remained well above the key support of $6,230 (Aug. 20 low) despite the ETF rejection, adding credence to our assessment that the cryptomarkets had already priced in the bad news.

Further, the decision by the US Securities and Exchange Commission (SEC) to review the rejection of the nine bitcoin-based exchange-traded funds (ETF) could demoralize the bears and trigger an unwinding of the short positions.

It is worth noting that the BTC/USD shorts on Bitfinex are hovering near record highs seen on April 12. So, there is a real risk of a significant short covering rally.

BTC/USD Shorts on Bitfinex

And last but not the least, the technical chart below indicates the path of least resistance remains to the upside while BTC is holding above the crucial rising trendline.

At press time, the cryptocurrency is changing hands at $6,550 – up 1.6 percent on a 24-hour basis, having bottomed out at $5,859 on Aug. 14.

4-hour chart

BTC continues to create higher lows (bullish pattern) along the rising trendline. The bullish crossover between the 50-candle and 100-candle moving averages (MA) also favors further gains in BTC.

Also, an extended period of consolidation often paves way for a violent move, according to the technical theory.

Hence, the bullish move could be sharp, similar to the one we saw on April 12, as the Bollinger bands (standard deviation of +2, -2 on 20-candle MA) have been flatlined since Aug. 11, meaning the cryptocurrency is lacking a clear bias for close to two weeks.

View

The odds are stacked in favor of a violent bullish move in bitcoin toward $7,000 (Psychological hurdle).

The bullish view will be aborted if BTC finds acceptance below the rising trendline support, currently located at $6,432.

BTC bears will likely be emboldened and could push the cryptocurrency below $6,000 (February low) if prices see a UTC close below $6,230 (Aug. 20 low).

Disclosure: The author holds no cryptocurrency assets at the time of writing.

Bitcoin image via Shutterstock; Charts by Trading View