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On Aug. 25, for the first time in nearly 15 weeks, <a href="https://xpertsstudio.com/strive-buys-more-bitcoin-while-sitting-on-a-292-million-paper-loss/” title=”Strive Buys More Bitcoin While Sitting on a $292 Million Paper Loss”>Bitcoin crossed above the $80,000 mark and continued to rebound powerfully, wiping away losses in May. The cryptocurrency soon hit the $81,000 mark briefly after a 25% rise over the past seven days, taking its market capitalization to $350 billion, above last week’s figure.
This move introduced BTC▲$62,630.00 into the key resistance region of $80,000 to $82,000, putting a cap on the coin’s price movement in May.
If the daily close is above the $82,000 level, it would mean that the breakout is confirmed and buyers have the strength to keep up with the rapid rise. If the rally fails, the next support zone is between $76,000 and $78,000, and it could be the first consolidation target.
Momentum indicators remained constructive, with the Know Sure Thing indicator just below 112.50, well above the signal line around 40.20, confirming positive acceleration in the upside momentum.
The Money Flow Index was at 77.22, indicating meaningful buying pressure but close to the overbought level of 80. It did not indicate an imminent correction would occur, but did indicate that the rally was overextended.
The weekly candle was stronger: According to Rekt Capital, Bitcoin’s weekly close above its 50-week exponential moving average is technically bullish, but the price is still barely above it. A failed retest could weaken the breakout, which will increase the chance of a second relief rally instead of a trend-reversal.
Supporting the move, U.S. spot Bitcoin ETFs registered roughly $1.9 billion in net inflows over the five sessions ending on Aug. 21, the strongest weekly inflow figure in nearly 10 months.
Much of this capital went into BlackRock’s iShares Bitcoin Trust, but the early acceleration of the price was driven by forced short-covering, as those shorting BTC were subsequently forced to purchase it when the price increased.
Other macro conditions, including the U.S. Treasury’s decision to increase the planned maximum sizes of some buybacks of longer-dated government securities from $2 billion to at least $4 billion, helped foster the positive sentiment.
The measure is not comparable to quantitative easing by the Federal Reserve, but it was expected to add liquidity to the market and was initially successful in moving long-term yields lower.
The next major test is U.S. inflation data, with personal income, spending and PCE inflation for July due on Aug. 26. A stronger than expected number could lift Treasury yields and weigh on risk assets, while a softer print could reinforce expectations for easier conditions.
For Bitcoin, holding the 50-week EMA and establishing support above $80,000 would support the breakout case, while a loss of the level would raise the probability of the recent rally being a fakeout.
Bitcoin has now risen almost 38% from the July 1 low of around $57,700, underscoring the speed of the revival. However, analysts believe that short-covering alone may not be enough to provide lasting support. Further ETF buy-in and spot demand will be key for BTC to flip the area of resistance around $80000 into a structural support base.
Source: bitcoinfoundation.org