The Bitcoin Bounce: Back to $10,000
Bitcoin bounced late on Friday in a fashion that likely caught virtually all traders off guard.
Trading around $7,500 earlier in the week, BTC bounced back to tag $10,000 and has opened the week just under that level.
However, there is still a degree of mystery around exactly what went on.
The bears were out in force last week as Mark Zuckerberg spoke about the problems Libra faced. The Libra announcement proved to be a real boom earlier in the year but has since run into multiple roadblocks.
While the fallout from that was still sinking in, traders got caught off guard by an announcement by China.
Firstly, Chinese President Xi Jinping said on Friday that the country would be investing heavily in Bitcoin’s underlying technology, blockchain. This was a market mover in and of itself and from that more speculation started to develop.
Three were even suggestions that China would buy all the Bitcoin in circulation. This is highly unlikely in reality but added more fuel to the fire.
Clearly the move higher caught a number of shorts off guard and they would have been forced to cover their positions which would likely have had a flow-on effect.
But as Monday opens, we will have to wait and see how price responds.
As we’ve seen, when price rallies sharply into a key resistance level, there is often a big stack of people trying to exit. They are often selling into strength. So that would suggest that the resistance level will hold.
I expect this $10,000 level to hold up, but we need to be quick to act if it looks like it won’t. Another lower high here might be a good short opportunity.
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