Bitcoin (BTC/USD) Bears Breathe Sigh of Relief
Bitcoin (BTC/USD) has benefited from recent demand after an already soaring prices benefited off of further gains since bulls failed to breach the key psychological level of 50,000. This follows Tesla’s announcement last week that the S&P 500 constituent invested $1.5 Billion in the digital currency with the hopes of adopting it as an additional payment method before other large corporates jumped aboard.
Meanwhile, failure to break above the psychological level of $50,000 insinuated that bears could drive prices lower, potentially towards previous support at $40,000.
Bitcoin (BTC/USD) Daily Chart
Chart prepared by Tammy Da Costa, IG
Bitcoin (BTC/USD)Technical Analysis
After breaking above $48,000 on Monday, price action retraced off of the key psychological level, falling to the key Fibonacci retracement level of the Jan – Feb move, currently providing resistance at $50,000. For now, sentiment remains bullish, with the Relative Strength Index (RSI) above 70, indicating that the short-term momentum continues to favor the bulls.
With $50,000 now on the horizon, a break above may result in new highs, once again. However, a break below current support could result in the $40,000 coming back into play.
Bitcoin (BTC/USD) Sentiment
Retail trader data shows 82.02% of traders are net-long with the ratio of traders long to short at 4.56 to 1. The number of traders net-long is 3.56% higher than yesterday and 9.90% higher from last week, while the number of traders net-short is 21.94% lower than yesterday and 3.57% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Bitcoin prices may continue to fall.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Bitcoin-bearish contrarian trading bias.
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.