Bitcoin’s Least Resistant Path is Higher

As bitcoin’s (BTC) price approaches another key milestone, the path of least resistant for the dominant cryptocurrency remains higher. – at least, for now. For investors, this means another substantial move in the direction of the dominant trend that first emerged two months ago.

BTC/USD Price Analysis

On Saturday, bitcoin price clawed above $5,400 on Bitfinex, setting the stage for a more substantial rally in the near term. At press time, BTC/USD was valued at $5,345.50, up 0.6% from the previous day. It was priced north of $5,310 on most major exchanges, including Coinbase, Bitstamp and Bittrex. (During the bear market, bitcoin traded at a significant premium on Bitfinex relative to other exchanges.)

At current price levels, bitcoin is considered overbought based on the daily relative strength index (RSI). However, the RSI is well below the highs observed in March and early April.

So far this month, bitcoin’s price has risen a staggering 30%. Year-to-date, the market has rallied more than 42%.

Bitcoin’s market cap is currently valued at $94.3 billion, according to CoinMarketCap. That represents a 52.1% share of the entire cryptocurrency market. Bitcoin’s so-called dominance index has risen sharply since the beginning of March, further highlighting its relative strength compared to altcoins and tokens.

Why Bitcoin is Poised to Continue Higher

As Hacked reported earlier this week, bitcoin’s dominant trends typically last between five and six months. These monthly trends occur within a much longer cycle that typically lasts four years. With December marking the latest and most substantial market bottom, the current four-year cycle began at the start of 2019.

If the above analysis holds true, bitcoin’s current uptrend is likely to continue for at least another two-to-three months. The leading cryptocurrency has been in an uptrend since February and has already recorded back-to-back monthly gains for the first time in over a year.

Get more analysis in our Crypto Week in Review: Bitcoin’s Virtuous Cycle Continues while Small Caps Surge.

Given the current price dynamics and considering the lack of bearish interest in the market, bitcoin is likely headed toward the $5,700-$5,800 region in the not-too-distant future. This view was recently echoed by cryptocurrency trader XC, who issued the following tweet on Thursday:

Although bitcoin is fully expected to correct lower from these levels, the extent of the drop is subject to speculation. For starters, BTC/USD shorts have been in rapid decline since the December peak and retail interest in the original cryptocurrency is slowly returning.

Since early December, bitcoin shorts have declined by nearly half.

Return to Heaven

A rally toward $5,700 and beyond is significant for one other reason: it puts bitcoin on track to completely negate the long-term bear market. Based on an analysis by Murad Mahmudov, bitcoin is currently in “purgatory” and will remain so until it breaks above $6,000. At this stage, it will return to “heaven.”

The $6,000 price level is widely regarded as the break-even rate for bitcoin miners, the blockchain maintainers that took a beating during the last leg of the bear market.

Bitcoin’s long-term investors should be excited about the trend reversal currently underway, but they should also be cognizant of major pullbacks and increased volatility in the second half of the year. The path higher will not be linear and we are likely to see several big shakeouts en route to new peaks. Long-term holders should therefore think in four-year cycles as opposed to short-term setups.

Read about why Hacked.com was correct in declaring 2019 bitcoin’s year of accumulation

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi