In a notable turn of events, Bitcoin (BTC) achieved a weekly closing price of $34,525 last week, marking its highest weekly close in over 550 days. This surge in value was accompanied by a significant breakthrough above the primary long-term horizontal resistance zone at $30,500, which had remained steadfast since May 2022.
Bitcoin’s Remarkable Weekly Performance
Examining the technical analysis on a weekly timeframe, it becomes evident that Bitcoin has experienced a rapid surge in the past two weeks. Last week, it managed to breach the $30,500 resistance, reaching a new annual peak of $35,380. Although it experienced a minor pullback after hitting this yearly high, Bitcoin ultimately concluded the week at $34,525, marking the highest weekly close since April 2022 when it settled at $38,468 during a pronounced bearish phase.
Crucially, the weekly Relative Strength Index (RSI) paints a bullish picture. The RSI serves as a vital momentum indicator that assists traders in gauging whether a market is overbought or oversold, guiding their decisions to accumulate or divest assets. With the RSI reading above 50 and trending upward, it indicates a favorable scenario for bulls and a promising upward trend.
Institutional Investment’s Influence on Bitcoin
The impending approval of a Bitcoin Exchange-Traded Fund (ETF) holds immense significance for the cryptocurrency’s future price trajectory. Rafay Gadit, the Co-Founder and CFO of the social investment platform Zignaly, emphasized that an approved Bitcoin ETF has the potential to attract institutional investors, bolster confidence in the market, and drive demand and prices upward. Conversely, a rejection of the ETF could introduce short-term bearish sentiments to the cryptocurrency market.
Gadit’s perspective aligns with the growing recognition of Bitcoin’s importance in finance, as evidenced by institutions like BlackRock entering the scene. They view Bitcoin as a prospective store of value or investment. This increased institutional interest has played a role in propelling Bitcoin’s price to the $35,000 range.
While institutional investments can elevate prices in the short term, they also tend to stabilize them in the long run, as institutional holdings generally exhibit lower volatility compared to retail investments. However, Gadit advises traders to remain cautious regarding their position sizes and always utilize stop losses to mitigate potential losses in case of unfavorable market movements.
BTC Price Projection: The Road Ahead
To offer insights into Bitcoin’s price trajectory, technical analysts employ the Elliott Wave theory, which identifies long-term price patterns and investor psychology, aiding in trend determination.
On the daily timeframe, the Elliott Wave count for Bitcoin is bullish, supporting the notion that the ongoing uptrend is likely to persist. The primary count suggests that Bitcoin is currently in the third wave of a five-wave upward movement (black). The sub-wave count, depicted in white, indicates that Bitcoin is presently in sub-wave four, which is a corrective phase.
Following the completion of this corrective phase, the most probable target for the peak of the fifth sub-wave stands at $39,200, representing a 13% increase from the current price level. This target is calculated using the 0.618 Fib retracement length of waves one and three combined with the resistance trendline of an ascending parallel channel.
However, it’s important to note that if Bitcoin experiences a close below the channel’s support trendline at $33,000, this wave count could be invalidated, potentially leading to a 13% decline towards the nearest short-term support level at $30,000.