Bitcoin is marching north again towards record highs after proving its resilience in recent days in the face of a rebounding US dollar.
“While many were concerned about USD strength and a tumultuous macro-market, BTC has continued to break recent highs,” Matthew Dibb, COO and co-founder of Stack Funds, told CoinDesk. “We believe the risk-out correlation between these markets is slowly dissolving and the cryptocurrency could challenge record highs.”
The dollar index, which tracks the value of the greenback against major currencies, rose 1.21% last week as rising US Treasury bond yields and losses in equity markets fueled demand for ports.
Although the dollar posted its biggest weekly gain since October, Bitcoin rose over 12% over the same period. The top cryptocurrency was last traded above $ 54,170, an 8% gain in 24 hours, and with a market cap now over $ 1 trillion according to CoinDesk 20 data.
A compelling move above the resistance at $ 52,666 hit the record high of $ 58,332 on February 22nd.
Source: TradingView, Patrick Heusser
“There are other positive signs on the technical chart,” said Patrick Heusser, trading director at Switzerland-based Crypto Finance AG, pointing out an outbreak above the red line of the Ichimoku cloud – a technical analysis tool that the Support can be identified and resistance levels and other essential information such as trend direction and momentum.
According to Heusser, the Bitcoin market has undergone a positive structural change in recent weeks that would pave the way for a more sustainable transition to lifelong highs. The futures premium has fallen, along with the steadily increasing open interest in futures and spot and futures trading volumes, he told CoinDesk in a Telegram chat.
Bitcoin three-month futures premium
Futures listed on major exchanges are trading at a significantly lower premium than spot market prices than the record spread seen in mid-February, when Bitcoin hit new highs above USD 58,000. The peak premium represented excessive bullish leverage which was offset by the retreat below $ 50,000 late last month.
Bitcoin futures open up interest in BTC terms
Futures open positions, or the number of open positions, rose to 334,328 BTC on Monday – the highest level since February 19 – after falling along with prices in the second half of February.
A price increase alongside an increase in open interest should confirm an upward trend. In the meantime, a fall in prices is considered temporary if it is accompanied by a fall in open positions. It did so during Bitcoin’s recent correction to $ 43,000.
Finally, blockchain data shows that the mood is still strong. The balance held on the exchanges continued its uninterrupted decline last week with an outflow of 35,200 BTC.
In light of key events like the Federal Reserve’s rate decision due next week, Dibb sees some price turmoil ahead of a possible breakout above $ 60,000.
At the March 16-17 meeting of the Federal Reserve, Chairman Jerome Powell is expected to reiterate his positive stance. However, traders will be listening to his comments on rising bond yields. Powell recently failed to worry about the turmoil in the bond market. However, an uncontrolled surge in returns can force him to act.
Heusser, meanwhile, has some concerns that Bitcoin order books are currently shifted to the sell side. However, he remains confident that these offers will be absorbed by strong inflows.
Bitcoin’s order book shows a tendency towards the sell side (red shaded area).
Source: okotoki.com, Patrick Heusser
“We have seen this before, and by continuously buying market spots (mainly on Coinbase) the price could go up,” said Heusser.
The cryptocurrency can still make losses if the stock market takes a sharp decline due to a sustained surge in returns, if any. However, Heusser does not expect a drop below $ 47,000.
Also read: Coinbase valued near $ 100 billion before March Nasdaq listing: Bloomberg
“During the consolidation, we built a solid liquidity pool of around $ 47,000 which I believe should be the local low until we hit a new all-time high,” he noted.