Bitcoin's rally is showing no signs of abating.
Prices surged to record levels on the CoinDesk Bitcoin Price Index (BPI) yesterday, with the world's largest cryptocurrency clocking a new all-time high of $6,306.58. With the push, bitcoin passed its previous high of $6,183 set on Oct. 21. At press time, the bitcoin-U.S. dollar (BTC/USD) exchange rate is $6,218.
As for why the price is trending higher, it seems there was an absence of strong news drivers. However, trading volumes in the BTC/USD pair jumped 103 percent on Sunday – indicating that the rally, fueled by trading activity, looks sustainable.
Volumes jumped to two-week highs on Sunday, and remain well below the Oct 13. high and the 2017 peak registered on Sept. 15.
Further, it's worth noting that volumes appear to be coming from a variety of markets – a deeper look at the volume activity indicates the jump to record high has been fuelled by U.S. dollar, Korean won and Japanese yen trading.
The above chart shows:
- Bullish rising channel breakout (bitcoin price closed above the upper end/ceiling of the rising channel on Sunday).
- However, a move above 100 percent Fibonacci extension level of $6,196.81 was short lived. The first attempt to cut through the key Fib. level had failed on Oct. 21.
- The relative strength index (RSI) is close to overbought level, but it is still sufficiently away from the October highs.
- Bitcoin is up 500 percent on a year-to-date basis. Thus, there is always a possibility of a healthy technical correction.
- Only a break below the rising trend line (dotted blue line) would warrant caution.
- On the higher side, the psychological level of $6,500 could be put to test if the cryptocurrency spends the next 12 hours or more building a base around $6,200 levels.
Bearish Scenario: Only a drop below 10-day MA in the next 24 hours would open doors for a re-test of last week's low of $5,376.
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