Bitcoin must overcome a big hurdle at $52,000 for any chance to break new highs in the short term.
Bitcoin's (BTC) price has been consolidating in the previous weeks as the sentiment and momentum have slowed to a crawl. That's very natural, as it's also impossible to throw a six every time.
Therefore, consolidation and correction are necessary for the market to recharge before resuming the uptrend. Several reasons were given for such a corrective move in the previous weeks, the primary ones being whales selling in addition to macroeconomic factors, particularly the surge in Treasury yields.
However, Bitcoin's price is back at a critical resistance zone for continuation. If that resistance zone breaks, new all-time highs are in play once more.
Bitcoin’s critical resistance zone at $52,000
BTC’s price is having a tough time cracking the resistance zone at $52,000, as the chart above shows. This resistance zone is critical for more upside, as that would open the gates toward $55,000 to $56,000.
Failing to break through this resistance zone again would be a bummer for Bitcoin’s bulls and would open the door toward a retest of the critical $46,000 level. It would also confirm further weakness for BTC/USD as it's still 17% below the current all-time high at $58,000.
However, the bullish aspect of this structure is the number of tests that the resistance zone has seen. Given that this resistance zone has been tested several times, it should become weaker with each attempt.
Thus, another resistance zone test should generate further strength for a price breakout toward $55,000.
The dollar shows strength alongside the 10-year yield
The primary reasons for the weakness of Bitcoin are a resurgent dollar and rising 10-year Treasury yields.
However, both of these rallies are now facing resistance zones, as the charts show. It's unlikely to see further strength in the dollar, as this crucial resistance zone should hold. If this resistance zone at 92.50 points holds, a retest of the 91-points zone is expected. Such a move would likely boost Bitcoin's price.
Government bonds are also facing a crucial area of resistance, which should also prevent, or at least stall, any upward momentum. The yields have rallied by almost 75% in 2021, which is a gigantic move in general. Hence, downward tests are becoming more likely, especially as the yields enter a big area of resistance.
So, a reversal of the rally in the dollar and yields should have a positive effect on Bitcoin’s price. Nevertheless, it is worth noting a few things that must first happen for BTC/USD to resume its bull run.
Crucial movements to watch for Bitcoin’s price
It is more important for BTC to successfully flip the $52,000 level into support than simply break above the $52,000 barrier, which already occurred on March 3, before the price retraced.
If that resistance-support flip happens, Bitcoin’s price will likely see a quick rally to the $56,000 level. However, another failed breakout above $52,000 would be a sign of weakness, which may be followed by a rapid drop. Therefore, traders and investors should anticipate a potential breakdown to $46,000 or even $42,000 if another fakeout does occur.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
via cointelgraph.com
