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Despite widespread speculation that Bitcoin’s bull run had come to an end, it managed to break above $34,000 on Tuesday. The asset has gained 10% in the last week and was trading at $34,745 at the time of writing. Many believe Elon Musk’s appearance at the “B-Word” event was the catalyst for this recovery. BTC surged by 8% immediately after.
The price hike has nonetheless left many analysts hopeful once more. In a recent video, popular analyst Benjamin Cowen expressed his own bullish sentiments. While he had mentioned in a video just last week that “we are technically still in a downtrend”, in his latest he opined,
“We are very close to breaking the downtrend on the price.”
Why so bullish?
To begin with, according to the chart below, BTC was finally testing the 50-day Simple Moving Average (SMA) for the first time since mid-May. It had been tested previously in January and March, when the line was acting as a support. Since then, the candlesticks have remained below the line following a failed breakout attempt in May.
Other indicators also pointed to a possible breakout. For example, Bitcoin’s 4-hour chart demonstrated a breakout from the downtrend that it had been following since May. While Cowen stated that this did not mean that the coin would immediately return to $60k, it did give the bulls a fighting chance.
Renewed buy-pressure may do some good for the coin
Similarly, the chart above showed that the bulls were at their peak in January, when the coin was extremely overbought. On the 1-day chart, the Relative Strength Index (RSI) has been following a straight downtrend since then, as sell-side pressure has remained dominant. This was recently reversed, however, when the indicator broke through the trend line after nearly 7 months.
In his previous video, Cowen had expressed dismay at the fact that even as BTC had touched upon new all-time highs earlier in the year, the RSI had just made lower highs corresponding to the price. Now, this breakout could be an essential signal towards renewed buy-pressure which could herald in price recovery.
According to the analyst, while these indicators are definitely positive signs to “restore confidence to the bulls,” Bitcoin needs to reach the 20-week SMA before the bull run can resume. In the chart above, the Bull Market Support band is made up of the 20-week SMA and the 21-week exponential moving average (EMA).
According to Cowen, “what matters most” was breaking through the 20-week SMA which was at a far-away $45k. He further elaborated,
“We are still well away from the 20-week SMA. Remember, in order for us to get super bullish again about a six-figure bitcoin, what we would like to see would be for Bitcoin to go above the SMA, come back down, test it as support and then go up.”
Now, looking at this price hike and the subsequent reversal of an elongated downtrend, it would be hard to ignore that Bitcoin might indeed be headed for a potential bull rally once more.