Nestled above the range of $11,600, Bitcoin survived a dire week of bearish pressure recently. Things went seemingly bad for Bitcoin as on 28th August, the asset dropped down as low at below $11,200. However, the support range between $11,220-$11,300 continues to be a bounce off point for Bitcoin.
The 4-hour chart of Bitcoin illustrates the activity witnessed before the recovery over the week. After enduring a descending channel from 17th August, the bullish implications were already valid but there was a belief that BTC was going to drop significantly below $11,000 or $10,000 following a 2nd re-test. However, the asset continues to re-trace back from the liquidity pocket, and at press time, the asset has managed to consolidate above $11,515 for the past 24-hours.
The 50-Moving Average is currently helping the asset sustain a position above, acting as strong support right below. With the Relative Strength Index or RSI exhibiting high buying pressure, the recovery depended on strong technicals, rather than experiencing only a minor spike.
Federal Reserve Policy Change to improve Bitcoin?
Last week on Thursday, Fed Chairman Jerome Powell stated that they wanted to make a drastic policy shift in terms of pushing up inflation. Although many found it counterintuitive to drive up the current inflation rate of 2%, Powell believed that inflation that is consistently low may pose a serious risk to the economy as well.
Now, a majority of Bitcoin proponents suggested that such a move will be extremely bullish for Bitcoin since increasing inflation would indirectly mean the loss of purchasing power of the fiat.
With Bitcoin currently in the midst of a bullish rally, many suggested that such a move might push Bitcoin above $500,000 as indicated by the Winklevoss Twins.
Now, over the past few weeks, many enterprises were already moving towards Bitcoin with Microstrategy setting up $250 million of its resource in Bitcoin for the exact objective. A case can be made that institutional players were losing faith in fiat and Bitcoin was becoming an incredibly viable option against the U.S dollar.
Bitcoin’s bull run went through a minor correction
As highlighted by the chart above, the larger picture signified more importance than the activity over the week. Bitcoin is currently under an immersive rally since April 2020 and routine corrections are a part of it. During the 240% 3-month rally in April 2019, there were four occasions of 9% drop for Bitcoin, suggestive of the fact that the recent drop was also expected.
With on-chain data and top traders indicating strong bullish sentiments, the market is moving upwards again as we enter the last month of Q3 2020.