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Bitcoin is Nearing Key Resistance as Market Posts Massive Rebound

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  • Bitcoin has seen some immense volatility as of late, with bulls reversing its recent losses entirely overnight as they regain control of the crypto
  • This price action confirms that the latest selloff was one that is quite common during bull markets when the crypto retraces 30-40% before continuing its ascent
  • BTC’s strength is creating tailwinds for the entire market, as ETH and most other major altcoins have also surged higher
  • One trader is now noting that he is flat on Bitcoin, for the time being, cautioning that the resistance around $40,000 could be quite significant and cause it to see a notable pullback
  • Once it can break above this level, however, the crypto could see some massive upwards momentum that leads it to new highs

Bitcoin and the entire cryptocurrency market have exploded higher today, with bulls taking full control of the market as they look to reverse the recent downtrend.

This market-wide strength shows few signs of slowing despite the resistance that Bitcoin is facing within the lower-$40,000 region.

The longer it consolidated below this level, the better poised it may be to post a breakout rally that sends it flying past here.

One trader explained that he is now watching for a break above $40,000 before he flips long on the cryptocurrency. He notes that this is a crucial level, and any strong rejection could lead to significantly further downside.

Bitcoin Explodes to $40,000 as Uptrend Resumes

At the time of writing, Bitcoin is trading up just over 5% at its current price of $39,400. This marks a notable surge from its recent lows of $30,000 set just a few days ago during a market-wide selloff.

Where the entire market trends next will undoubtedly depend on whether or not bulls can maintain their present momentum, as use it to shatter the $40,000 resistance level.

Analyst Claims BTC Still at Risk of Seeing Downside Until $40,000 is Flipped to Support 

While sharing his thoughts on where Bitcoin might trend in the short-term, one analyst explained that he is closely watching to see its reaction to $40,000.

“Nice pop out of the ascending triangle for $BTC. I’m flat as we approach this horizontal resistance zone. I’d be surprised if we blow through to new highs on the first attempt, but BTC has surprised me plenty of times before.”

Bitcoin

Image Courtesy of Jonny Moe. Source: BTCUSD on TradingView.

The coming few days should provide insights into Bitcoin’s strength as it pushes against a crucial resistance level.

Featured image from Unsplash.
Charts from TradingView.





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Bitcoin

Bitcoin becoming a cyclical asset, not a hedge, according to JPMorgan strategists

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The Bitcoin (BTC) bull market has put the flagship cryptocurrency on par with cyclical assets as opposed to a hedge against market stress, according to analysts at JPMorgan Chase. 

JPMorgan strategists John Normand and Federico Manicardi say anyone betting on Bitcoin as a portfolio diversifier is putting themselves at risk. In a Thursday report obtained by Bloomberg, the strategists called Bitcoin the “least reliable hedge during periods of acute market stress.”

They added:

“The mainstreaming of crypto ownership is raising correlations with cyclical assets, potentially converting them from insurance to leverage.”

Cyclical assets typically refer to stocks that follow the trend in the overall economy, which means their performance depends on the business cycle. These companies produce goods and services that are in demand when the economy is performing well. Consequently, these are some of the first items people forego when the economy weakens.

Cyclical stocks include companies in the restaurant, hospitality, airline, furniture, automobile and other discretionary industries.

While seemingly arguing against Bitcoin’s “digital gold” narrative, the strategists acknowledged that the cryptocurrency may be suitable for investors worried about policy shocks and the systemic devaluation of fiat currencies.

In that vein, their views seem to diverge from fellow JPMorgan strategists led by Nikolaos Panigirtzoglou who believe that Bitcoin is drawing investors away from precious metals. As Cointelegraph reported last month, Panigirtzoglou and colleagues argue that only a small reallocation from gold to Bitcoin would generate “structural” headwinds for the precious commodity.

They said at the time:

“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”

Against the backdrop of these competing views, Bitcoin remains a highly volatile asset. The cryptocurrency more than doubled in price over a three-week period, going from $20,000 to nearly $42,000, before seeing a pullback in bullish momentum earlier this month. It has since corrected roughly $10,000 from its all-time high, including a 20% drop over the past seven days.