Bitcoin is headed toward $17,500, with a technical analyst suggesting that a return to its all-time high of $20,000 is now possible.
The sustained rise in prices since the beginning of October has given investors cause to be bullish again, especially after the currency climbed above $16,000 on 12 November.
“Prices are moving in what’s technically considered an ‘upward continuation pattern’. More often than not, that means that prices will then break out of the pattern in the direction of the prevailing trend,” said Simon Peters, a crypto asset analyst at online brokerage eToro.
“If we see a strong bullish breakout from the pattern, then there is no reason we can’t see the next price threshold set at $17,500.”
The world’s largest cryptocurrency last neared $20,000 in late 2017 before the bubble popped. The price plunged to a low of nearly $3,000 a year later.
Reaching $17,500 would mean bitcoin has moved past its previous resistance level from January 2018, Peters said.
Technical analysis of bitcoin prices is difficult to rely on, however, as it uses patterns in how prices have behaved historically to make future predictions. Bitcoin does not produce an income unlike equities and bonds, so it isn’t possible to use standard valuation methods to calculate its likely value.
Bitcoin traded at around $16,250 on November 13, according to data from Luxembourg-based exchange Bitstamp. The value of bitcoin futures expiring next month is $16,425. Contracts expiring in January traded at $16,685 today, indicating the investors think the price will rise at a slower pace into the New Year.
Peters said investors would remain focused on the proposed US fiscal stimulus package for signs of positive movements in the market, now that Joe Biden has clearly won the presidential election.
“Even with the prospect of a Covid-19 vaccine, the US economy will still need support to assist it through the period before it is made available to people,” he added. “The size of the agreed stimulus package and the mechanics behind its funding could be the catalyst to finally take us past $17,500”.
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