Amid Middle Eastern tensions, Bitcoin has taken a dip, but the horizontal support at $60,000 has held firm thus far. Currently bouncing higher, can $BTC now start to reclaim lost ground and move back to the top of its bull flag?
Geopolitical and economic shocks could still affect Bitcoin
Nobody knows whether the Middle Eastern conflict will escalate further, if things will worsen in Ukraine, or if tensions will increase over Taiwan. In today’s uncertain times, markets are having to operate in an environment in which any of these regions could suffer some kind of shock, whether that be a sudden worsening of the situation or even some kind of black swan event.
Bitcoin is still considered by many as a risk asset, even though there are arguments to the contrary. Therefore, the number one cryptocurrency is probably going to continue to be rather volatile. Where traditional markets could perhaps lose 1% to 2% on some bad news, Bitcoin could fare a lot worse.
Bitcoin price starting to recover
Source: TradingView
That said, the Bitcoin price (BTC/USD) is starting to recover from its latest correction. As displayed on the short term time frame in the chart above, the $BTC price came all the way down to the $60,000 horizontal support level. This level suffered a continual assault from Tuesday through to Thursday. However, the level held firm as Bitcoin bulls bought the price up every time it descended.
Friday has witnessed a breakthrough of the descending trend line, and it appears that the price could climb higher from here. First target is the 0.382 Fibonacci at $62,430, where the last rejection took place.
The Fibonacci levels are quite accurate for recent price steps, and it can be seen that the 0.5 at $63,200, and the 0.618 at $64,000 are also important targets. Nevertheless, for the entire Bitcoin move from the local bottom of $49,000, the rally will become a failed one unless the $BTC price can get above $70,000 as a minimum.
Bullish Bitcoin bounce
Source: TradingView
Zooming out into the weekly time frame, things appear to be entirely normal for the price of Bitcoin. All price fluctuations, since the bull flag began to be formed in March this year, have generally stayed within the flag limits.
If Bitcoin is able to continue bouncing from what could be the bottom of the latest correction, this would be very bullish. In an uptrend, when the price of any asset makes a correction, it would mostly come down to the 0.618 Fibonacci before reversing back up. Sometimes the deeper correction to the 0.786 Fibonacci will occur. However, when the correction only comes down to the 0.382 Fibonacci, this is a sign of bullishness, and this appears to currently be happening to the Bitcoin price.
Add to this that the Relative Strength Index at the bottom of the chart is showing a higher high, after breaking through the descending trend line, things are looking better for Bitcoin.
If the three aforementioned regions of conflict can see lessened tensions, and if the world’s major economies can also experience some stability, Bitcoin’s path out of its bull flag may be less tortuous. That said, it’s a big ask.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
