Bitcoin jumped as much as 5% above $46,000 on Monday, helping it clear a key technical resistance level that signals the potential for more upside ahead.
The popular cryptocurrency jumped above its 200-day moving average for the first time since mid-May, which is often viewed as a key level of support or resistance among technical analysts and traders.
Bitcoin’s move higher is viewed as constructive after it staged a false breakdown below the closely watched support level of $30,000 last month. Additionally, the move higher in bitcoin amid a regulatory and legislative “assault” by China and the US represents a big risk-on signal, according to Fundstrat’s Tom Lee.
“You always buy bitcoin when it breaks above its 200-day moving average,” Fundstrat’s Tom Lee told CNBC on Monday, calling it a key rule of trading bitcoin. According to Lee, bitcoin averages a six-month return of almost 180% after it breaks above its 200-day moving average.
Going forward, the upside momentum in bitcoin should set it up for another test of resistance near $51,000, which represents a key fibonacci retracement level, according to Fairlead Strategies’ Katie Stockton. That represents potential upside of 11% from current levels.
But Lee thinks bitcoin can go even higher before year-end, arguing that a move to $100,000 is reasonable for the popular cryptocurrency. “$100,000 into year-end is actually pretty reasonable [for bitcoin],” he concluded.
While bitcoin’s move above its 200-day moving average is constructive for further gains, technical analysts will be looking for confirmation of the move, signaled by consecutive daily closes above that key level.
Read more: A 15-year professional trader breaks down why bitcoin could surge to $45,000 in the next 2 to 3 weeks before dropping to the $32,000 to $35,000 range – and lays out 3 trades for ethereum and 2 altcoins as he predicts similar moves
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