Bitcoin (BTC) soared past the $30,000 mark on Wednesday to brush shoulders with $31,000, marking the big crypto’s highest levels in over two months. This is a sign of resilience against short sellers who appeared to be in control of the price over the past few weeks.
As the second quarter of the year nears its end, BTC makes an impressive comeback and is likely to push higher. Many Bitcoin enthusiasts expect the price to smash the all-time highs above $69,000 to reach the much coveted $100,000 milestone in 2023.
The Fear and Greed Index reads “Greed” for the second day running, according to data from Alternative.
According to the analytics firm, “emotions and sentiments” around Bitcoin right now are in the positive zone, accompanied by intense buying to push the price higher.
But even as things look rosy, it is important to look under the surface to see if there is anything threatening the ongoing rally.
Bitcoin Recovers Multi-week Losses – But are Bulls Safe?
BTC’s rally on Wednesday saw its price rise to almost the same level it reached on April 14. The rally has been attributed to announcements that Legacy Finance had applied to launch a Bitcoin exchange-traded fund (ETF).
As such, the BTC/USD rose to undo all the losses witnessed over a span of more than 8 weeks, adding 24% to the local lows at $24,480 reached on June 15.
The relative Strength Index (RSI) is at 72 in the overbought region, reinforcing the bulls’ grip on Bitcoin’s price. The strong support provided by the Simple Moving Averages (SMA) on the downside add credence to BTC’s positive outlook suggesting that the ongoing rally may continue in the short term.
BTC/USD Daily Chart
On the other hand, the recent rally has seen the price form a double top around the $30,820 area. The last time the price was rejected from this zone in April it went on to lose more than 18% of its value.
If the same scenario plays out, supplier congestion from this area will lead to a correction from the current levels. This may happen as sellers book profits on the rally to $30,000.
Perhaps the most stubborn hurdle for the bulls lies at the $32,000 psychological level. Note that the price has turned away from this level in June last year, plummeting approximately 45% to set a swing low at $17,704.
Therefore, even if Bitcoin rises another 5.4% from the current level to $32,000, it may form another double top to June’s highs, causing a downturn.
The same opinion was held by a Twitter user by the name Crypto Tony who tweeted saying that $32,000 was a major resistance for the king crypto and warned traders not to “get greedy on this pump” as things may change quickly.
In summary, the above analysis suggests that the SMAs provide real demand zones for Bitcoin on the downside as capital continues to flow into the market. As such, the ongoing rally may continue for a while.
However, the double top at $30,820 and the major resistance at $32,000 pose a threat to the upside, suggesting that a downturn may be coming soon.
