Bitcoin is trading around 40,000 per dollar and has yet to hit key resistance at 41,980.24. The fate of the main cryptocurrency depends on the behavior relative to this level. And you have to wait - it's too early to sell, and even more so to buy.
Today, a review of an analyst caught my eye, which notes that bitcoin is now in a do-or-die situation. According to the review, BTC/USD can grow sharply if it is possible to maintain the recent momentum, during which it rose by 17% this week, rising above $40,000.
Well, I agree. And the point is not only in the strong technical resistance, which is formed by the mirror level of 41,980.24 but also in the psychological price of $40,000.
Meanwhile, analysts at the Kraken cryptocurrency exchange say that the past week has been "explosive" and "a shift in market-wide sentiment seems to have turned some bears into bulls."
But they also point out that bitcoin will need to gain a foothold above the key psychological level of $40,000 for investors to feel confident buying more tokens and raising the price.
"Right now, bulls are in a do-or-die situation. Given the struggle of BTC to overcome the resistance from $40,000 to $42,000 in the past, they will need to confirm the level of $40,000 as support," the note says.
The analysts added, "The chances of bitcoin hitting a new all-time high by the end of the year have increased."
Moreover, the bitcoin market dominance index is approaching 50%. At the time of writing, according to CoinMarketCap, bitcoin accounted for about 48% of the total cryptocurrency market. Earlier, JPMorgan crypto expert Nikolaos Panigirtzoglou noted that when the bitcoin dominance index exceeds 50%, it will signal a transition to a bull market.
Experts note another bullish signal: the number of bitcoins on exchanges fell sharply on Wednesday, which suggests that large buyers are moving cryptocurrency to vaults.
But let's look at the situation from the other side. The outlook for tightening regulation may become the driver that, coinciding with the position of BTC/USD below the key resistance level of 41,980.24, will turn the price sideways down.
Yesterday's review noted that Senator Elizabeth Warren has begun pushing for tougher rules to protect consumers in a highly volatile market.
She wrote to Treasury Secretary Janet Yellen that the US Financial Stability Oversight Council must "act quickly to use its statutory powers to address the risks of cryptocurrencies; market regulation needs to be introduced to ensure the safety and stability of consumers and our financial system."
The arguments in favor of bitcoin's growth are growing, but the technical picture on the chart is the field where you can understand the real state of affairs. You have to trade what you think, not what you see.
