BTC Surpasses $45K for the First Time Since May – Analysis, 9 Aug
This past week the price of Bitcoin surpassed the psychological level of $45,000 for the first time since May. Because of this, Bitcoin has been able to recover almost half of the recent losses, and the bearish sentiment in the crypto community has started to fade away:
On August 3rd, Chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler announced at the event Aspen Security Forum 2021 that the commission is considering a strict oversight regime to protect cryptocurrency investors. The head of the department clarified that the legislative priority should focus on crypto trading, lending, and DeFi platforms, where many unregistered securities are traded as tokens.
On August 5th, the long-awaited London hard fork took place in the main Ethereum network at block 12,965,000. EIP-1559 was one of the major upgrades implemented. It involves burning part of the transaction fees (depending on the network load) and reducing the volatility of the gas price. As a result, the Ethereum network should handle many more transactions per second and cut transaction fees.
“1559 is definitely the most important part of London. And it is proof that the Ethereum ecosystem is able to make significant changes,” Ethereum’s founder Vitalik Buterin said in an interview with Bloomberg News.
Another noteworthy event from last week was the continued discussion of the $1 trillion bipartisan infrastructure bill in the U.S. Senate. Part of the funding is expected to come through a stricter regime of cryptocurrency taxation.
Many well-known cryptocurrency advocates have started to criticize the infrastructure bill. Twitter’s founder Jack Dorsey underlined that such kind of regulations would drive the blockchain technology developments outside the United States:
Coinbase co-founder and CEO Brian Armstrong called the infrastructure bill ‘disastrous’ for the cryptocurrency industry in the U.S. And guess what - even Elon Musk, founder of SpaceX and CEO of Tesla, agreed with him:
After another week of solid price increase, the Monday market starts with a decent intraday correction. According to Coin360.com, one Bitcoin costs €37,259.94 (-2.02%), one Ethereum – €2,510.83 (-5.86%), one DOGE – €0.2094 (-8.15%), and one UNI – €22.79 (-6.67%):
Source: Coin360.com (Daily crypto market performance)
Now, let us look at the price charts of the leading cryptocurrencies against the euro in the most notable time frames.
In the weekly time frame (1W), BTC/EUR has formed three consecutive long bullish candles – a candlestick formation called Three White Soldiers:
According to the technical analysis theory, Three White Soldiers is a bullish candlestick pattern that occurs at the end of a correction and is used to predict the renewal of the uptrend. That is why many traders will look for additional bullish signals in the shorter time frames to open long positions.
For example, in the 4-hour time frame (4H), BTC/EUR may draw an Ascending channel:
If the price of Bitcoin drops to the upper bound of the consolidation range and the lower line of the potential Ascending channel and if after that the price rebounds, some traders will enter the market by opening a long position to try to catch the subsequent price increase within the potential channel.
Similar to the weekly price chart of Bitcoin, the price chart of ETH/EUR has formed a Three White Soldiers candlestick pattern as well:
This bullish candlestick formation indicates that the buying pressure is intensifying and signals a potential change in direction. That is why Ethereum bulls will try to spot the right moment to enter the market in the shorter time frames.
For example, in the daily time frame (1D), ETH/EUR has returned to the Ascending channel (uptrend):
Now, if the price drops to the lower line of the channel and then rebounds, some traders will open long positions to ride the next wave of price hikes within the channel.
In the weekly time frame (1W), DOGE/EUR has formed another bullish candlestick with a local low above the previous one and a local high above the previous one as well:
We consider this sequence of small bullish candlesticks with ascending local lows and ascending local highs as an initial signal showing that this is probably the end of the correction.
However, for the uptrend to resume, first, in the daily time frame (1D), DOGE/EUR has to overcome the resistance coming from the 90-day Moving Average (MA 90) that is at the level of approximately €0.2346:
If DOGE/EUR surpasses MA 90, some more aggressive traders will start opening long positions. Moreover, if the pair faces resistance from MA 90 and drops, we expect the price to receive support at the 30-day Moving Average (MA 30) or approximately €0.1723.
Similar to the weekly price charts of Bitcoin and Ethereum, UNI/EUR has formed a Three White Soldiers candlestick formation as well:
That means that the chances for the continuation of the price hike increase. That is why we think it is worth keeping an eye on the daily chart (1D) where UNI/EUR has formed a Double Bottom (common trend reversal pattern):
So, we think that if a pullback takes place where the price drops to the neckline of the Double Bottom and bounces off afterward, many traders will open long positions.
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