Bitcoin is gathering fresh upside traction this Wednesday.
At press time, the bitcoin-US dollar (BTC/USD) exchange rate is $5,540, up 3 percent from the intraday low of $5,376, but still down 2 percent on a daily basis. Week-on-week, BTC is trading largely unchanged, while on a monthly basis, it is up 41 percent.
But, it’s perhaps the daily recovery that is most notable. While slight, it can be read as encouraging as it follows the news that bitcoin gold, a new publicly traded copy of the bitcoin network was made available to investors on exchanges yesterday. While the asset is not yet issued by developers, many exchanges made IOU versions of BTG available, putting sell pressure on the market and spurring buying elsewhere.
Yet, it does not seem that new bitcoin buyers are in a rush to exchange these phantom BTG tokens for fiat currency, and the recovery suggests more new money could be entering the BTC market at a price they feel is attractive.
So, is bitcoin heading back towards record highs?
The fact that search volumes remained low during yesterday’s sell-off suggests the dip was largely seen as a healthy correction.
Google search volume
The above chart shows:
- Search volumes registered a minor uptick yesterday, which could be associated with hard fork (bitcoin gold creation) and remained well below the level seen on Oct. 21 (the day bitcoin rallied to record highs).
Search volumes show bulls have little reason to worry, however, the price action analysis suggests bitcoin is not out of the woods yet.
Despite the recovery from $5,376, the short-term outlook remains murky, courtesy of the bearish price relative strength index (RSI) and price money flow index (MFI) divergence.
Only a convincing move above $5,867 would open doors for a rally to all-timeighs above $6,100.
On the downside, an end of day close below the support of the rising trend line (dotted blue line) would:
- Add credence to bearish divergence
- Confirm the rally from the September low of $2,980 has topped out
- And shall open doors for a drop $4,500 levels.
Ping pong balls via Shutterstock
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