With bitcoin (BTC) showing resilience to negative news flow, a strong bullish move is looking increasingly likely.
On Wednesday, the Chicago Board Options Exchange’s (CBOE) BZX equity exchange withdrew its request for a rule change by the U.S. Securities and Exchange Commission (SEC) that would have allowed it to list a bitcoin exchange-traded fund (ETF) backed by VanEck and SolidX.
The market narrative with respect to the ETF is that its approval could trigger the next bull run in the leading cryptocurrency by market value. Moreover, in the past, markets have responded negatively to delays or rejections in ETF approval.
The latest ETF withdrawal, however, has barely moved the needle for BTC's price. The cryptocurrency continues to trade in a sideways manner above the crucial support at $3,500.
The calm response to the bearish news could be considered a sign of seller exhaustion – more so, as the primary trend is still bearish. As a result, the cryptocurrency could soon end the 14-day-long consolidation with a bullish breakout.
Further, the Cboe ETF – first filed with the SEC in June 2018 – had experienced several delays in the past. As a result, the bar of expectation was set low and was likely priced in by traders.
As of writing, BTC is changing hands at $3,540 on Bitstamp, representing a 0.70 percent drop on a 24-hour basis.
On the daily chart, BTC has created a descending triangle, which comprises a horizontal line connecting a strong support level and a falling trendline representing lower highs.
A UTC close above the upper edge of the triangle, currently at $3,630, would confirm the breakout and could yield a rally to the psychological resistance of $4,000.
The odds of the bull breakout look good, as the ETF news failed to embolden the bears and gold is feeling the pull of gravity (as discussed yesterday, BTC and gold look to be inversely related).
- BTC’s defense of $3,500 amid the bearish news flow likely indicates seller exhaustion. As a result, the prospects of cryptocurrency witnessing a triangle breakout on the daily chart are high. A bull breakout, if confirmed, would expose resistance lined up at $4,000.
- A triangle breakdown – i.e. a close below $3,470 – would validate the bearish setup on the weekly chart and increase the odds of a drop to the December low of $3,122.
Disclosure: The author holds no cryptocurrency at the time of writing.
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