Technical Analysis

Bitcoin breaks out of the range to hit a three-week high

Bitcoin has been a graveyard of volatility for the past three weeks in a tight range around $16,800 but it came to life today in a broad risk rally. It’s up $455 to $17,385 on hopes that the worst has passed.

The good new for crypto is that it’s been weeks since the market was hit with some kind of major headline or rumor about an exchange collapsing or facing a serious investigation. Unfortunately for bulls, regulation is going to continue to ramp up and that will cool the flow of money into crypto. At the same time, I’d argue that the physical bitcoin market should attract flows.

So much of the money in ‘bitcoin’ in the past two years was synthetic. For instance, FTX held close to zero bitcoin that was ‘bought’ by client accounts. It’s similar at many other brokers.

As people move off-exchange into self-custody, that should be bullish for bitcoin over time. Though time will tell if money migrates back to the convenience of exchanges.

For now, the price action is a small win. In order to generate some real momentum, the $18,400 level will need to give way. That would set the stage for a rebound above $20,000. Given the resilience of bitcoin in the past eight weeks, I think there’s some room for optimism in the short term.

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