Bitcoin climbs 5% above a key technical level that could suggest further upside ahead

Bitcoin
Bitcoin


Bitcoin jumped as much as 5% above $46,000 on Monday, helping it clear a key technical resistance level that signals the potential for more upside ahead.

The popular cryptocurrency jumped above its 200-day moving average for the first time since mid-May, which is often viewed as a key level of support or resistance among technical analysts and traders.

Bitcoin’s move higher is viewed as constructive after it staged a false breakdown below the closely watched support level of $30,000 last month. Additionally, the move higher in bitcoin amid a regulatory and legislative “assault” by China and the US represents a big risk-on signal, according to Fundstrat’s Tom Lee.

Lee was likely referring to China’s crackdown on bitcoin mining, as well as an amendment in the bipartisan infrastructure bill that would broaden the designation of brokers in the crypto space.

“You always buy bitcoin when it breaks above its 200-day moving average,” Fundstrat’s Tom Lee told CNBC on Monday, calling it a key rule of trading bitcoin. According to Lee, bitcoin averages a six-month return of almost 180% after it breaks above its 200-day moving average.

Going forward, the upside momentum in bitcoin should set it up for another test of resistance near $51,000, which represents a key fibonacci retracement level, according to Fairlead Strategies’ Katie Stockton. That represents potential upside of 11% from current levels.

But Lee thinks bitcoin can go even higher before year-end, arguing that a move to $100,000 is reasonable for the popular cryptocurrency. “$100,000 into year-end is actually pretty reasonable [for bitcoin],” he concluded.

While bitcoin’s move above its 200-day moving average is constructive for further gains, technical analysts will be looking for confirmation of the move, signaled by consecutive daily closes above that key level.

Read more: A 15-year professional trader breaks down why bitcoin could surge to $45,000 in the next 2 to 3 weeks before dropping to the $32,000 to $35,000 range – and lays out 3 trades for ethereum and 2 altcoins as he predicts similar moves

Bitcoin price chart
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2 crypto pros break down why bitcoin in the clear for now after plunging 35% in a matter of days

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  • Insider spoke to two cryptocurrency professionals on why they’re still bullish towards bitcoin.
  • Bitcoin plunged 35% in a matter of days, then saw renewed selling pressure after China reiterated its bitcoin-mining clampdown.
  • The bitcoin bulls said the cryptocurrency will see range-bound trading in the short term.
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After taking a one-day breather following a week-long plunge that saw it lose more than 35%, bitcoin resume its sell-off on Friday after China reiterated its crackdown on bitcoin mining and trading.

Despite the quick succession of blows, two crypto professionals argue that the worst is over for bitcoin for now, despite renewed selling pressure.

“We believe that most of the leverage is out of the system now and bitcoin should start to form a base here,” Pankaj Balani, CEO at Delta Exchange, a crypto derivatives exchange, told Insider.

Balani did acknowledge that bitcoin’s recent travails have eroded investor confidence, meaning it will take time for the cryptocurrency to gain sustained upward momentum.

He also added that bitcoin’s price action until the end of May will be critical, although he does think the asset’s price has already bottomed out. Balani did note the $36,000 level as a support threshold, adding that a conclusive breach would signal a longer-term pullback.

To David Jones – chief market strategist at Capital.com, a crypto trading platform – corrections like this are normal. He cites bitcoin’s cult-like following as a reason why the cryptocurrency won’t stay downtrodden for long.

“So has the bitcoin bubble burst?” he said. “Don’t bet on it. Its devoted band of followers means that the crypto-grandaddy has a phoenix-like superpower to rise again.”

Further, in a video published on May 19, billionaire Mike Novogratz said bitcoin will consolidate for weeks, if not a couple of months – although he didn’t give a price range.

“We’re not going to put Humpty Dumpty back together again in a week,” said Novogratz. “But I want to stress loud and clear that the underlying progress that’s happening in both the bitcoin ecosystem … is full speed ahead.”

Read more: 7 crypto heavyweights told us what’s behind the sudden sell-off that erased over $400 billion from the market in just 24 hours – and whether now is the time to ‘buy the dip’

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An early bitcoin investor says the best time to buy is when nobody’s talking about it – and warns this isn’t the first crypto bubble

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The ultimate time to buy bitcoin is when no one is talking about it, according to one early adopter.

“The best time to buy bitcoin is whenever blood is on the street, everyone’s panicking, and no one’s talking about it,” the investor, who prefers to remain anonymous, told Insider in a phone interview from Manila, Philippines. “That’s the ultimate time to buy.”

In 2013, he made an initial purchase of 2.5 bitcoins from a seller who went by the name “Mang Sweeney” on LocalBitcoins.com when the cryptocurrency was trading at $100 per coin. “Mang” denotes a sign of respect in the local language in the Philippines. 

At the time, the platform allowed face-to-face meetings, after which the seller would transfer the cryptocurrency on-the-spot via their laptop or mobile. Mang Sweeney was already trading bitcoin when it was worth $10 a coin since speculative buying and selling was popular even then, according to the anonymous buyer.

Still, online interest in bitcoin in 2013-14 was nowhere near current levels. A chart below shows how Google searches for “bitcoin” in the Philippines have risen steadily since that period, then hit a peak in late 2017 when its price shot to a record high. It declined throughout 2018, but has returned in the last year.

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Read more: We spoke to Winklevoss-backed crypto platform Gemini about bitcoin, how to use stable coins, and why regulation won’t kill the boom in digital currencies

“People forget this isn’t the first bubble,” the investor said. “Until people understand the technology of it, it will always be a speculative asset.”

The early bitcoin buyer said he doesn’t advise friends and family to trade the token when it’s stuck in bubble territory. “When no one wants to touch it, that’s when you buy it. Not when people are talking about it,” he said.

Bitcoin’s deflationary nature discourages using it as a real currency, according to him. He lost 16 bitcoins in the Japanese cryptocurrency exchange Mt. Gox, one of the few exchanges that early adopters could trade on. It closed abruptly in 2014 following its collapse after hackers apparently raided the exchange. Almost 850,000 bitcoins belonging to investors were lost. 

“Finance guys” who are talking up the $100,000-$150,000 level, according to him, are actually unloading their bitcoin investments bit by bit while saying it’ll get to a certain price because some of them have already accumulated large amounts. 

Read more: Bubbly behavior is brewing in markets and Big Tech is reeling from 2 major political events this month – Three investing heavyweights that jointly manage almost $1 trillion break down the impact on these stocks and how to position

“The only reason I would tell people to just dabble in it is because it’s important to understand how it works and how to take care of it. If you don’t know your way around passwords or simple two-factor authentication then you’re going to get creamed. People will steal your bitcoin,” he warned.

But there are voices cautioning investors who are beginning to view bitcoin as digital gold.

“For bitcoin to be considered in a portfolio and to become an investable asset, similar to gold, the asset would need to improve the risk-return profile of that portfolio,” said Gerald Moser, chief market strategist at Barclays Private Bank. “This seems a tall order.”

While it is near impossible to forecast an expected return for bitcoin, its volatility makes the asset almost “uninvestable” from a portfolio perspective, he said.

Separately, Janet Yellen, nominee for treasury secretary, suggested on Tuesday that lawmakers curtail the use of cryptocurrencies as they’re used “mainly for illicit financing.”

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Billionaire ‘Bond King’ Jeff Gundlach says bitcoin appears to be in ‘bubble territory’

FILE PHOTO: Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital LP., speaks at the Sohn Investment Conference in New York City, U.S. May 4, 2016.  REUTERS/Brendan McDermid
FILE PHOTO: Jeffrey Gundlach, Chief Executive Officer, DoubleLine Capital, speaks at the Sohn Investment Conference in New York

  • “Bond King” Jeffrey Gundlach told CNBC on Monday bitcoin hit “bubble territory” once it passed $23,000, and he doesn’t feel comfortable with the coin’s current levels. 
  • “I don’t like bitcoin here, I don’t like things that are up on a stilt like that,” the DoubleLine Capital founder said of the coin that rallied nearly 300% in 2020. He added that he’s “neutral” on bitcoin.
  • Bitcoin fell as much as 13% on Monday to $30,558. It’s lost over $10,000 in value since hitting a record above $41,000 last week, but the coin is still up nearly 89% in the last month.
  • Watch bitcoin trade live here.

“Bond King” Jeffrey Gundlach told CNBC on Monday bitcoin hit “bubble territory” once it passed $23,000, and he doesn’t feel comfortable with the coin’s current levels.

“I don’t like bitcoin here, I don’t like things that are up on a stilt like that,” the DoubleLine Capital founder said of the coin that rallied nearly 300% in 2020.

Bitcoin fell as much as 20% on Monday, to $30,324. While the coin has lost roughly $10,000 in value since hitting a record above $41,000 last week,it’s still up nearly 89% over the past month. Gundlach suggested bitcoin’s run-up has happened all too fast.

“People seem to be so much on one side of the boat that I just really don’t really believe the boat can sail that well, and I think that’s where bitcoin is on the bullish side right now,” he said. 

Read more: The CIO of a $500 million crypto asset manager breaks down 5 ways of valuing bitcoin and deciding whether to own it after the digital asset breached $40,000 for the first time

The investor added that bitcoin has a “terrific supply and demand dynamic” if institutions get involved. The total number of bitcoins that can ever be mined is 21 million, which means that the supply stays scarce even if demand grows. He’s insisted that he’s not a “bitcoin hater” and told CNBC he went neutral on bitcoin after it hit $23,000.

In a DoubleLine webcast in December, he said: “I’m not a bitcoin pro or con person. I’m not in the cult, and I’m not in the anti-bitcoin cult. I just look at it as a fascinating representation of animal spirits and speculation.”

Earlier, in a RealVision interview from Oct 1, Gundlach said he “didn’t believe in bitcoin.”

“I think that it’s a lie,” he said. “I think that it’s very tracked, traceable. I don’t think it’s anonymous.” Gundlach later added that he was “not at all a bitcoin hater.”

Read more: Goldman Sachs says to buy these 29 stocks poised to deliver the strongest sales growth through year-end

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