Bitcoin’s price has risen past its key average for the first time in two months, signaling strengthening bullish momentum.
The cryptocurrency’s price has gained over 3% to $73,700 in 24 hours, topping the 50-day moving average, which stood at $71,125 at the time of writing. The positive price action follows days of resilient performance amid the Iran war and global equity turmoil, especially in Asian markets.
The so-called 50-day moving average is one of the most widely tracked momentum indicators in the market, which analysts recently cited as one of the formidable resistance levels holding back gains.
“This indicator often signals the medium-term trend, and a confident break above it would be an important turning point in the coming days,” Alex Kuptsikevich, senior market analyst at FxPro, said in an email.
Note, however, that the bullish breakout doesn’t necessarily promise a sustained uptrend. For instance, the previous one in early January was followed by an 8% price rise, but the momentum lasted just two weeks before selling resumed. Previous instances have delivered mixed results as well.
For now, the breakout, points to a continued move higher and perhaps increased volatility as prices move closer to the $75,000 mark. This is the level where market makers – those ensuring a smooth trading experience by providing liquidity on an exchange – hold net short gamma positions worth billions, as CoinDesk noted Friday.
So, as prices rise toward $75,000, they are likely to buy high to rebalance their net exposure to neutral. This could add to market volatility.