The Bitcoin (BTC) price has shrugged off concerns about sudden movements in long-term dormant wallets, as well as ongoing regulatory uncertainty, with Coinbase now suing the US SEC for a lack of clarity on crypto rules, and has returned to the $28,000 level for the first time in four days.
This is most likely due to an increase in technical buying ahead of the 50-Day Moving Average in the $27,200s, as well as near-term support in the form of recent lows just above $27,000.
Bitcoin’s more than 2.5% bounce into the $28,200s on Tuesday has bulls hoping that the world’s largest cryptocurrency by market capitalization will be able to quickly reclaim the $30,000 level that it briefly conquered earlier this month.
A Bloomberg-monitored short-term buy signal went off just over a week ago, when Bitcoin was trading for just under $29,000.
BTC has historically gained around 7% in the 10 days following this trading signal.
If history is any guide, the Bitcoin price could be on its way to $31,000 within the next three days.
That would necessitate Bitcoin breaking through key near-term resistance levels such as the 21DMA near $28,900 and the late-March/early-April highs in the $28,900-$29,300 range.
But, given the lack of new notable resistance levels ahead of the year’s highs around $31,000, a break above this key resistance zone would open the door to further upside.
Upcoming Macro Risks Could Shake Things Up
Major upcoming macro risk events, such as the US GDP and inflation reports this week, followed by the Fed meeting next week, jobs and ISM survey data, could throw a wrench in the works if they deliver a meaningful shift in the macro narrative.
Aside from safe-haven demand amid banking crisis fears and a rebound after Q4 2022’s historically oversold market conditions, one of the reasons for this year’s Bitcoin rally has been that the Fed’s tightening cycle is nearing its end.
According to the CME Fed Watch tool, the market expects one more 25 basis point rate hike to 5.0-5.25%, followed by up to 100 basis point hikes by the end of the year.
Markets appear to believe that an impending credit crunch, combined with the delayed impact of aggressive interest rate hikes, will push the economy into recession in the second half of the year, forcing the Fed to ease financial conditions to support growth.
This is a broadly positive Bitcoin/crypto narrative, as it assumes improved financial conditions in the future, undermining arguments for a lower Bitcoin price.
Assuming that this narrative holds in the coming weeks, the Bitcoin price should remain supported in the medium-to-long term.
Long-term on-chain indicators and analysis of Bitcoin’s longer-term market cycles, as mentioned in a recent article, are sending strong signals that the cryptocurrency is in the early stages of a new bull market.