Bitcoin (BTC/USD) price picked up notable momentum on Wednesday as the digital currency hit a new 2023 high. Granted, 2023 is a mere 6 weeks old and the current bull run looks pretty insignificant on the one-year chart.
But I’m not here to ruin the party, rather just trying to gather information to make an informed decision on where Bitcoin is heading next.
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First, let’s discuss where we are right now. BTC broke above the $24,000 mark as part of one of the strongest daily gains in months. Invezz reported on Bitcoin’s strong momentum earlier today and as is often the case in the crypto space, an article can become irrelevant and antiquated within hours.
That said, don’t break out the champagne – just yet.
This is what concerns me the most. The 200 day moving average is one of my go-to and top indicators. So long as Bitcoin trades south of the 200 day MA, bears are still in control. A break above and all bets are off the table.
But we have to get there first, and it won’t be easy.
The 200 day MA also roughly coincides with key resistance levels and last summer’s highs when Bitcoin looked poised to stage a rebound only to be met with intense selling pressure.
Many traders and analysts on Twitter seem to hold a similar view, and for good reason. Call it perhaps cautious optimism. Just five days ago, the net unrealised profit of all Bitcoins in circulation was a mere $2,500.
Meanwhile, the US dollar index and Bitcoin are both higher on Wednesday. Has this ever happened before? I don’t think so and this could be problematic. The DXY measures the strength of the US dollar versus other assets.
When investors are shifting from other assets into the greenback, the DXY index moves higher. There is a typical inverse correlation between DXY and Bitcoin but such is not the case right now. I don’t like uncertainty.