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The analyst also sees the latest cryptocurrency ban in China as a positive for Bitcoin and the US dollar.
According to Mike McGlone, senior commodity strategist at Bloomberg Intelligence, Bitcoin (BTC) has a better chance of recovering to $60,000 than breaking below its current support level of $30,000 to target $20,000 in the short term.
A screenshot from McGlone’s latest analysis on the flagship cryptocurrency, first shared by Bloomberg senior ETF analyst Eric Balchunas, shows him comparing Bitcoin’s ongoing price action with the “too-cold” period of the 2018–2019 trading session.
In detail, the BTC/USD exchange rate entered a prolonged consolidation period near $4,000 following an 80%+ drop in 2018, but a sudden run-up in 2019 sent its prices as high as $14,000 on some exchanges.
McGlone, known for his previous bullish calls on Bitcoin, suggested that BTC, which has been consolidating near $30,000 since May, could stage a similarly unexpected rally while aiming for a refreshed resistance target near $60,000.
“The more tactical-trading-oriented bears seem to proliferate when Bitcoin sustains at about 30% threshold below its 20-week moving average, allowing the buy-and-hold types time to accumulate,” the strategist wrote.
The moving average trio
The bearish and bullish cycles of Bitcoin appear to revolve around three key moving average indicators: the 20-week exponential moving average (20-week EMA; the green wave), which serves as interim support/resistance, the 50-week simple moving average (50-week SMA; the blue wave), and the 200-week simple moving average (20-week SMA; the orange wave).
During bull markets, Bitcoin prices tend to remain above the three moving averages. In the meantime, bear trends see cryptocurrency prices closing below the 20-week EMA and the 50-week SMA, as shown in the chart above.
In a bear market, the 200-week SMA is typically the last line of defence. So far, Bitcoin has bottomed out twice near the orange wave, sending prices skyrocketing. In 2018, for example, a breakout from the 200-week SMA drove Bitcoin prices to nearly $14,000.
Similarly, during the COVID-19-led crash in March 2020, the wave support capped the cryptocurrency’s attempts to fall. Later, the price ranged from $3,858 to more than $65,000.
Bitcoin has now fallen below this trendline three times since 2018. The cryptocurrency has broken below the 20-week SMA (near $39,000) and is now looking for support near the 50-week SMA (circa $32,200). If the previous fractal is repeated, the price should continue to fall towards the 200-week SMA (around $14,000).
McGlone, on the other hand, believes there could be an early rebound. The strategist cited the recent China crypto ban as a bullish fundamental.
Tether takes the cake
Beijing announced a complete ban on cryptocurrency operations in May. The decision stonewalled the mining operations in the country, which were forced to either cease or move their base outside. Bitcoin prices fell sharply in response.
Nevertheless, McGlone highlighted China’s rejection of open-source software crypto assets as a plateau in their economic ascent. In a tweet published Friday, the analyst attached an index showcasing booming volumes and capitalization of U.S. dollar-backed digital assets, including Tether (USDT).
He then pitted the rising demand for digitized dollars against the Chinese yuan-to-dollar exchange rates, noting that the logarithmic scale of market capitalization fluctuations between the two fiat currencies was below the baseline zero between 2018 and 2020. That means the yuan was depreciating against the dollar.
The scale just went back above zero, signaling interim growth for the yuan against the dollar. But its uptrend still appeared dwarfed by Tether, whose market cap rose by more than 40% above the baseline. McGlone noted:
“China’s rejection of open-source software crypto-assets may mark a plateau in the country’s economic ascent, we believe while extolling the value of the U.S. dollar and Bitcoin.”
Furthermore, Petr Kozyakov, co-founder and CEO of global payment network Mercuryo, stated that while the US government has not officially launched a central bank-backed digital dollar like China, the availability of many other alternatives — such as Tether, USD Coin (USDC), and Binance USD (BUSD) — could pose a challenge to the Chinese-controlled digital yuan.
“These cryptocurrencies are pegged 1:1 to the US dollar, and as shown in the chart McGlone provided, the dollar is leading the digital rise over the Chinese Yuan,” Kozyakov explained.
“While China’s crackdown has had an impact on Bitcoin’s price as it hovers above $30K on 23rd June, fundamentals have improved vastly since 2018 due to institutional FOMO. […] Bitcoin should recover to $50K by the turn of the year.”
The Chinese economy will keep growing
However, rejecting McGlone’s viewpoint, Yuriy Mazur of CEX.IO Broker stated that the Chinese economy should continue to thrive with or without cryptocurrencies, claiming that the demand for digital assets has nothing to do with it.
“The Chinese government is too smart to miss out on something the world deems valuable,” Mazur said
“So, expect them to take considerable measures to roll out a Yuan-backed cryptocurrency (in the future) that they have complete control over.”