Is Bitcoin Building Support Above $11,000?
Bitcoin prices have been trading north of $11,000 for more than a week, seemingly gathering strength above that level.
The digital currency has rallied this year, climbing more than 200% from under $3,900 in March to more than $11,800 today, CoinDesk data shows.
While it has experienced some notable gains, the cryptocurrency has been unable to convincingly break through $12,000, additional CoinDesk figures reveal.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Several experts weighed in on this situation, offering technical analysis and pinpointing fundamental variables that could help explain the digital asset’s price movements.
“Bitcoin has a lot of psychological support near $11,000,” said William Noble, chief technical analyst for cryptocurrency data provider Token Metrics.
He added that “BTC has been underappreciated this year.”
“That changed when Square became the second major corporation to put BTC on its balance sheet. The Square move makes the corporate CFO a new major player in the crypto markets.”
“Our group has coined a new term to describe how bitcoin holds up so well. We call it FOHO, or Fear of Holding Off,” said Noble.
Tim Enneking, managing director of Digital Capital Management, also commented on the bitcoin markets, stating that the digital currency has been “absolutely” building support at $11,000.
However, he described the $12,000 level as being the “mother of all resistance,” emphasizing that “all price action for the past almost five months has pivoted around that level – and still is.”
The $11,000 level, Enneking stated, is “simply a step along the way.”
He also focused on bitcoin’s recent ability to break away from other assets, noting that bitcoin dominance had risen lately as altcoins failed to keep up.
“Had BTC fallen as much as alts recently, $11k would have broken,” said Enneking.
“That lack of correlation (albeit very short-term), coupled with today’s (even more short-term) lack of correlation with the SPX, could mean that good things for bulls are about to happen.”
Avi Felman, head of trading at BlockTower Capital, also spoke to the recent divergence of bitcoin and the S&P 500.
Bitcoin rose today, surpassing $11,500, while the S&P 500 fell more than 1.5%, he noted.
“Recently Bitcoin and the S&P have been tightly correlated intraday, with short traders pushing around Bitcoin,” said Felman.
“Strong performance today in the face of equity weakness is indicative that there is additional new cash flowing into the Bitcoin markets, potentially new allocations similar to what we saw from public companies MicroStrategy and Square,” he stated.
Considering the bullish market dynamics that bitcoin has been enjoying lately, Enneking made an optimistic prediction about the digital currency.
He forecasted that “$12k may well fall shortly, and then we will face the 16-month wall at $14k, which is really a surrogate for a new ATH (all-time high),” he stated.
“Our thinking is that, once $12k turns into support, $14k and ATH become academic within no more than six months.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.