In the past four days, the bitcoin price has increased from $7,630 to $8,240 by nearly eight percent against the U.S. dollar as other major crypto assets such as Ethereum and Litecoin recorded large gains.
As technical analysts anticipate bitcoin to sustain its momentum in the near to medium term following the seven-year trendline of the asset, strategists look towards the trade war between the U.S. and China as a potential catalyst of the dominant crypto asset.
TECHNICAL INDICATORS FOR BITCOIN ARE GOOD, TRADE WAR IS A CATALYST
According to Josh Rager, the bitcoin price still remains above a seven-year trendline and as long as the asset remains above a key support level in $7,200, the analyst said that it would be able to sustain its upside momentum.
“In case you haven’t seen, BTC is currently sitting above a 7-year trendline that has only broken once as support ( Nov. ’18) Bitcoin reclaimed support above the trendline in April and if BTC can hold above $7200 it looks bullish for continuation,” said Rager, adding that bitcoin could challenge the $8,550 mark in the near term.
Year-to-date, the bitcoin price is up 123 percent against the U.S. dollar, outperforming every major stock index and most asset classes including oil and precious metals.
Although the momentum of bitcoin and the rest of the crypto market remains strong subsequent to large year-to-date gains, key catalysts are necessary to sustain the upside movement of the market.
In recent weeks, search engine interest for the keyword “bitcoin” in China has surged on platforms like Baidu amidst intensifying geopolitical risks arising out of the trade war between the U.S. and China, indicating that the retail demand for bitcoin may be on the rise.
As reported by CCN, the majority of on-chain transaction volume of Tether, a stablecoin that represents the value of the U.S. dollar, came from China in the second quarter of 2019, which suggests that individual investors in China are likely using the stablecoin to trade crypto assets.
Grayscale, a crypto investment firm with $2 billion in assets under management, stated that while it may be far-fetching to expect investors to rush into crypto positions in the short term to safeguard holdings from the slowdown of the growth of the global economy, the firm said that it may increase the merit of the asset for a broader market of investors.
The Grayscale report read:
With continued adoption, Bitcoin represents a transparent, immutable, and global form of liquidity that can provide both wealth preservation and growth opportunities. As a result, we believe it deserves a steady strategic position within many long-term investment portfolios. While Bitcoin may not be appropriate for all investors based on their investment mandate or market microstructure limitations, some may see the benefit of adding an allocation to their portfolios.
With local analysts in China expecting the trade war to extend throughout the second half of 2019, geopolitical risks are likely to continue rising in the upcoming months.
IS A PULLBACK NOT IN THE BOOKS?
When the bitcoin price achieved its yearly high at above $9,000, technical analysts expressed concerns about a possible pullback in the range of 30 to 40 percent.
The stability shown by the market in the past month may suggest that the crypto market may not experience pullbacks in the magnitude of previous corrections prior to 2017 due to significant changes in the structure of the market.