Bullish Bitcoin weekly outlook – top traders confident: „We are still early“
- Bitcoin fell sharply last week as the US dollar benefited from rising government bond yields.
- Nonetheless, dip buying near a technical support level kept the cryptocurrency’s bullish bias intact.
- A further rise in yields could see the bears test the support area for a breakout.
The BTC/USD exchange rate posted a strong recovery, erasing most of the previous week’s losses on Monday. It managed to close Sunday’s session above $45,000 – a level that falls within the support Bitcoin Freedom area that has kept Bitcoin’s bearish attempts from turning into a full-fledged sell-off.
Still, the cryptocurrency fell as much as 26.30 percent after hitting a record high above $58,000 on February 21. There was a clear sign of profit-taking in all riskier markets, including technology stocks.
The interest rate on the benchmark 10-year note jumped from 1 per cent at the start of 2021 to more than 1.6 per cent before the February close, its highest level in a year. The rise reduced the attractiveness of bitcoin, a non-interest-bearing asset, as it was already trading at an overvalued level.
This led to a massive downward correction, with the price falling as low as $43,016 in the last session. However, a correction in 10-year bond yields at the end of last week and the beginning of the new week coincided with a bounce in bitcoin markets.
Technical support held
The inverse movements between the 10-year bond yield and bitcoin this week are no guarantee of a negative correlation. Rather, they have to do with strong buying sentiment in bitcoin markets within a demonstrable support area highlighted in the chart below.
Bitcoin is again reaching the support area that recently sent its prices to record highs. Source: BTCUSD on TradingView.com
So far, the area has kept the bears from extending their selling bias. Many analysts see this as confirmation that Bitcoin’s correction will not last.
Instead, the bulls will take over the market and drive prices back to their recent record highs.
„Even in this correction, the outflow of Bitcoin from exchanges is still strong,“ argues Michaël van de Poppe, an independent market analyst. He says that means people are buying Bitcoin to hold it as an investment vehicle – and not selling. Poppe:
„We are still early. We are in a healthy correction.“