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October 8, 2022
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Guide & Analysis

Bitcoin signals wedge drop to retest $ 58,000

Bitcoin started this week in positive territory, looking to recapture its record levels after dropping to three-week lows.

Bitcoin was up 4.70% this morning, reaching an intraday high of $ 47,500 after bouncing on its 200-4H simple moving average wave. Its strong retracement also helped to break above a downtrend line resistance that comes as part of a wedge fall pattern.

In retrospect, traders have noticed some bullish reversal patterns that form when an asset falls while forming a sequence of ups and downs. This ends up creating two converging trend lines. Traders perceive an upward bias when the asset convincingly breaks Cunha’s resistance, accompanied by higher volumes.

Bitcoin above $ 50,000

On Monday, March 1st, Bitcoin showed an interesting break of resistance. The bullish move signaled that the cryptocurrency may return to the $ 50,000 mark.

However, a 50-4H convergence of simple moving average (the blue wave) and a horizontal resistance line close to $ 52,170 should test bitcoin bulls before they try to claim the $ 58,000. In the meantime, the $ 43,000-45,500 support area needs to hold onto the floor to prevent bears from taking over or risk lowering BTC / USD rates to less than $ 40,000 or more than $ 30,000.

Overall, the initial bullish moves this week show that bears are losing focus in the short term, which should help Bitcoin sustain its recovery up to $ 50,000 at best.

Macro narrative

The Bitcoin recovery follows the recovery of U.S. government bonds on Friday and Monday. Meanwhile, the cryptocurrency hopes to remain healthy as well as the $ 1.9 trillion stimulus proposal by US President Joe Biden advances in the House of Representatives.

The bill is now in the Senate, controlled equally by Democrats and Republicans, with a decisive vote for Vice President Kamala Harris, a Democrat. This greatly improved the likelihood that the bill would become law, even if the entire Republican bench voted against it.

Ecoinometrics Analysts observed that the Federal Reserve holds about $ 1.5 trillion in its General Treasury Account.

Meanwhile, Treasury Secretary Janet Yellen clarified that her office plans to spend all of the money to stay on track with Biden’s expansion plans, which, in addition to the stimulus, also involves a $ 1.4 trillion loan waiver. and expenditures of another $ 3 trillion for infrastructure projects.

“All of this is on the table for 2021, and the total is $ 6.3 trillion that the US Treasury will have to find somewhere,” said Ecoinometrics. “Even if the final number is lower, it is still several trillion, much more than what is in the General Treasury Account at the moment.”

“In this environment, I can only see the Bitcoin narrative as a hedge against the risk of rising inflation,” added the data analysis portal.

Source: Bitcoinist

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