Bitcoin managed to break above the resistance level above $21,000 and it looks like it is poised for more gains. The cryptocurrency is posting its first week in the green after relentless selling pressure pushed it to a multi-year low of around $17,000.
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At the time of writing, Bitcoin (BTC) is trading at $21,700 with a gain of 5% and 12% in the last 24 hours and 7 days respectively.
Data from Indexes of Materials (MI) shows an increase in bids for the price of BTC as it moves to $22,000. The cryptocurrency is registering around $10 million in bid requests at just $21,800 and $21,500.
As seen below, these levels were previously unprotected and were subject to further declines. On the lower time frames, it looks as if investors are forming a liquidity shield for the price of BTC at its current levels.
The current bullish price action was preceded by an increase in buying pressure from BTC whales. This MI data shows Large entities have bought more Bitcoin since the beginning of July It affected the price of Bitcoin in an upward trend.
The data shows a slight decrease in buying pressure, which could indicate that the price of BTC will return to a consolidation phase. In order to maintain the bullish momentum, analysts from Material Indicators claim that the price of BTC should stay above $20,000 in the next two days.
In order to extend the bullish momentum, the cryptocurrency needs to regain the 200 Weekly Moving Average (WMA) of $22,560. Analyst Michael van de Poppe Approves On possible price consolidation before any attempt to restore higher levels:
#Bitcoin’s critical resistance as we speak. (The volume has to do with the fact that Binance added zero trading fees) It looks good overall but we wouldn’t be surprised by some minor consolidation before a big breakout.
What could get in the way of the new Bitcoin rally
According to economist Alex Krüger, the Federal Reserve (Fed) remains the most significant headwind to the price of BTC. The financial institution tries to slow inflation by raising interest rates.
However, the Fed believes that any potential negative impact from raising interest rates or lowering its balance sheet, quantitative tightening (QT), has already been priced in. Thus, why was the possibility of a future drop reduced, Krueger He said:
Unless inflation surprises significantly to the upside, the Fed is fine with things as they are, and monetary tightening is mostly in the rate. Qt will not destroy the markets. The main moves require an information shock, which then leads to a shift in the balance.
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The next major obstacle to the price of BTC could be the traditional corporate earnings season. If stocks are trading to the downside as a result of the economic slowdown, the already correlated crypto market may follow.