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The Bitcoin Bull is Being Reined in…(Before it Really Got Going)

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Over the last few days, the price of Bitcoin mounted several attempts to break above the $9k mark and it got promptly denied every time. To maintain the momentum of its recent turn-around rally, it really needs to beat this key resistance level.

Following its massive correction (called a meltdown by some, and the “popping of the bubble” by others) the price of the most prominent representative of the crypto industry finally found a floor and turned around over the last week or so. While besieged investors certainly welcomed this mini-rally, it fell well short of what one would call a proper rebound. The price keeps flirting with the key resistance level of $9,000, but every time it reels in the target, it gets almost vehemently rejected, dropping back down to the mid 8,000s.

That said, the current outlook is neutral. A revival of the recently seen bearish tendencies is only likely around the February 2 low of 7.8k. With the bulls chained and restrained, the balance could indeed tip either way in the coming days.

BTCUSD Chart

As far as technical analysis is concerned, over a longer time-frame, the price of BTC is indeed stuck in a downward-sloping channel, the upper “wall” of which acts as a very solid resistance indeed.

The RSI on the other hand breaks its own descending trend line over the same period, pointing to potential upside, as do the 5- and 10-day MAs.

The lines of the Stochastic oscillator have crossed a number of times too, still flirting with oversold territory, so that too points to a possible continuation of the currently unfolding bull run.

In case this run does indeed come to fruition, a break above $10,000 is possible, though gains recorded above this level aren’t likely to last.

What about the fundamentals?

Since futures have been added to the BTC equation, sort of dragging the whole shebang down to earth a little, technical analysis has arguably become much more useful in attempting to predict future price-swings. The fundamentals are still “fundamentally” important in this regard though, and as such, they can never be ignored.

News emanating from the South Korean scene have been among the fundamentals driving the price of cryptocurrencies lately. In this regard, it has to be noted that authorities are considering the implementation of Bitlicense-style rules for local exchanges, as part of their continued efforts to rein in this previously untamed segment of the finance industry.

In other news: the ECB’s Mario Draghi has made it clear that his institution does not want to be involved with the regulation of cryptos in any shape or form, since it does not consider this kind of undertaking “its responsibility”. In more or less the same breath, Mr. Draghi also mentioned that he did not see BTC as a currency, contrasting the relative stability of the EUR to the high volatility of BTC and cryptocurrencies in general.

Draghi then proceeded to bash the decentralized nature of BTC, pointing it out that while the USD and the EUR were backed by solid centralized entities (the Federal Reserve and the ECB respectively), there was nobody backing Bitcoin.

Obviously, all the above are well in line with what one would expect to hear from the president of the ECB regarding cryptos, but that fact that the said Central Bank is not interested in regulating cryptos, might be seen as a bit of a silver lining.

At press-time, the price of BTC is sitting at the $8,611 mark, with an ETH costing $852, and BCH edging close to $1,250.

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