After over a month of testing $10k, this week saw the Bitcoin price finally return to levels last seen in February before the COVID-19 pandemic took hold – albeit briefly.
Late on Monday, 1 June, bulls burst convincingly through the psychologically-important $10k resistance barrier, with Bitcoin trading as high as $10,429. For a few glorious hours on Tuesday, it felt as if the bulls were truly on the march again. However, it was not to be, with a drop of $800 in 5 minutes meaning any gains made were short-lived.
Despite this minor setback, the Bitcoin price was still up over the week and it has still significantly outperformed the stock market in 2020. The big question now is, can bulls summon the energy for another rally? And if they do manage to overcome $10k, will they be met with weakened resistance this time around?
Price AnalysisShort Term View
It was a relatively uneventful end to last week, with Bitcoin largely trading sideways in the $9,400 - $9,600 zone. On Monday though, the bulls rallied to finally break through the $10,000 resistance level we have been talking about for the last few weeks. The price went as high as $10,429, as a new wave of volatility greeted the end of the daily closing period for 1 June. This was, however, followed by a sharp retrace on Tuesday – hitting a low of $9,330 before returning to the previously-mentioned $9,400 - $9,600 zone.
It’s now vital that the bulls reclaim the position above $9,600 so they can focus on higher levels towards $10,000. If $10,000 is overcome again, there is strong resistance to be found at $10,500, after which $11,800 is possible. On the flip side, continued declines under the short-term support at $9,400 could easily see a breakdown towards $9,000. Beyond this, there is another support zone near 7645.00, which is the level where a previous price drop back in March stalled.
Long Term View
Bitcoin has now been wobbling between $8,600 and $10,000 for over 30 days, with this week’s breakout providing only a brief respite. $10,000 is an important psychological resistance level – that it was eventually overcome in such convincing fashion could still provide a significant boost to traders seeking to capitalise on a bullish technical setup.
However, their efforts are still being undercut by low trading volumes. The 7-day average real trading volume* has been trending downwards and has looked weak ever since we started ranging in the $9,000-$10,000 area. We saw a strong bounce in volume when BTC pushed above $10,000, which could indicate a trend shift in volume again, but if there’s to be a charge past $10,500 then this trend will have to be sustained.
The Fear & Greed Index is once again increasing and the market is getting greedy. This is the third time that the sentiment is pushing up in this area since the beginning of May. Moreover, we’ve now stayed out of the “Extreme Fear” area for more than a month, signalling a more confident market overall.
Futures market looking bullish
The premiums for BTC futures contracts have spiked lately, as the Bitcoin price is climbing again. Both CME and retail-focused platforms are looking more bullish, with the annualised premiums for June contracts pushing well average levels since late January. However, this can quickly change. We have seen several times since the market crashed in March and traders should watch out for leveraged positions getting liquidated.