Bitcoin Sees 9% Gain as Turmoil Hits the Forex Markets

Bitcoin is on the rise Thursday morning (UTC), showing resilience in the face of a global dash for dollars seen in the foreign exchange markets.

At time of writing, the cryptocurrency is trading near $5,670, representing a 9.4 percent gain on a 24-hour basis. Bitcoin found bids near $5,260 during the Asian trading hours and has been climbing since, according to CoinDesk's Bitcoin Price Index.

While bitcoin is flashing green against the U.S. dollar, most fiat currencies are currently trading in the red. For example, the British pound-to-dollar exchange rate is hovering near 1.1555, the lowest level since 1980. The currency pair has dropped by nearly 8 percent this week.

The Australian dollar fell to a 20-year low of 55 U.S. cents early on Thursday and is currently reporting a 0.6 percent drop on the day.

The greenback has gained in the past six trading days against all major currencies, as noted by macro analyst Holger Zschaepitz.

The surge indicates many investors are selling everything, even safe havens like Japan's yen and Swiss francs, to move their money into dollars over fears of a coronavirus-led recession in the global economy. “If cash is king, then dollar cash is currently being world president," according to ING's head of global markets.

Bitcoin, however, isn't bowing down to the new cash overlord, and could see bigger gains if the U.S, equity markets put in a good performance in line with rising European stocks. At press time, the Euro Stoxx 50 – the eurozone's benchmark index – has added 1.3 percent to its value.

A risk reset on Wall Street cannot be ruled out, as central banks from Australia to Canada have launched easing programs to inject massive amounts of liquidity into the system.

Bitcoin's technical charts, too, are suggesting scope for a stronger recovery rally.

Bitcoin defended the psychological support of $5,000 on Wednesday and ended up producing a small hammer candle, validating seller exhaustion signaled on Monday.

A hammer candle occurs when sellers fail to keep prices at the lowest point of the day and is widely considered an early sign of a trend reversal.

The MACD histogram is printing higher lows below the zero line, indicating a drop in bearish momentum.

Bitcoin produced a green marubozu candle in the 60 minutes to 10:00 UTC, which comprises a big body and small or no wicks. The bullish indicator shows buyers were in control from the session's open to its close.

The odds appear stacked in favor of a rise to the top of the ascending triangle at $5,926. A high-volume break above that level could cause more bargain hunters to join the market, producing a stronger rise to the next resistance at $6,425 (December low).

Conversely, a triangle breakdown would open the doors for a re-test of the March 16 low of $4,446.   

Disclosure: The author holds no cryptocurrency at the time of writing.