Bitcoin’s price dipped below $26,000 on May 25 but quickly recovered and soared above $28,000 on May 29. The rally was triggered by reports that a tentative deal was reached between the White House and congressional Republicans.
This was important because, without a deal, the United States was staring at a debt default in early June, which would have been catastrophic for the US and the global economy. After the initial euphoria of the deal, traders are likely to shift focus on the interest rate hikes. The US dollar which generally moves in inverse correlation to Bitcoin has made a smart recovery in the past few days.
Bitcoin dropped to $25,864 on May 25 but the long tail on the day’s candlestick shows strong buying at lower levels. The bulls continued their purchase and propelled the price above the 20-day exponential moving average (EMA) on May 28. This suggests that the bearish momentum is weakening. Buyers will try to further strengthen their position by driving the price above the descending channel pattern.
If they succeed, it will suggest that the corrective phase is over. The BTC/USD pair could first rise to the psychological resistance of $30,000 and then to $31,050. Contrarily, if the price turns down and breaks below the 20-day EMA, it will suggest that the pair may extend its stay inside the channel for some more time. On the downside, a break below the $25,810 support could open the doors for a fall to $25,000.
This remains the key level to watch out for because a break below it will tilt the advantage in favor of the bears.
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