What’s Behind the Bitcoin Rally?


Throughout the entire month of September, Bitcoin had been traveling in a lazy sideways channel, bouncing between a floor of 25150 and a high of 28000. Throughout September, the 200 Simple Moving Average(SMA, shown in red below) held up as a strong level if resistance, keeping Bitcoin from rallying.

Then on Monday. October 16, Bitcoin broke through the 200 SMA, and a frenetic rally followed.

What’s Behind this Rally?

Fast Company reports that an uptick in demand is being fueled by investors anticipating the approval and listing of Bitcoin ETFs. 

Reuters suggests that Bitcoin can be ‘immune’ to the same risks that led to the demise of Silicon Valley Bank, Credit Suisse and Signature Bank.

“Bitcoin’s recent bull run looks to be mainly supported by individual investors – ranging from retail to whales – as we have seen evidence of institutions exiting during this rally,” said Zhong Yang Chan, head of research at crypto data firm CoinGecko.

Crypto skeptics aren’t convinced.

“It’s rather narrow-minded to say that bitcoin is going to succeed because a bank failed,” said Usman Ahmad, CEO of Zodia Markets, the crypto exchange of the venture arm of Standard Chartered (STAN.L) and Hong Kong crypto firm BC Technology Group.

“But confidence is almost a critical factor – confidence in the banking system has been damaged.”

Whether you’re a fan of Bitcoin or not, the bulls are clearly in charge, for now.

A Short-Term Technical Outlook fo Bitcoin

While Bitcoin shows no stopping in growth, a small pullback to the 32500 level isn’t out of the question.

When you look at the 8 Exponential Moving Average (8EMA, shown in purple), notice how price has a tendency to hug that line. The 3 EMA also has a tendency to hug the 8 EMA. When the 3 EMA gaps away from the 8 EMA, price usually snap backs like a rubber band being stretched and released. It’s mean-reversion in motion. If that happens, then we will witness a short-tem pullback from 34299 baack to somewhere around 32500.

After that, it’s anyones guess, but I plant to keep an eye on the 50 SMA, plotted in white. If it crosses the 200 SMA, then a “Golden Cross” is in play, which could fuel the resumption of a rally.

Bear in mind that all trading involves risk. Never trade with funds you cannot afford to lose.

Stay tuned to Global Investment Daily as we monitor the recent rally in Bitcoin and other cryptos.

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