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Bitcoin has remained trapped in a downward channel since the latter part of June. With the last couple of days of positive price action, is bitcoin now ready to go higher?
A bull flag breakout?
Bitcoin has been in an accumulation phase for the past seven weeks. Following a spike higher from a mid-June low of $24,800, the price almost reached $32,000 before rolling over and following the downwards channel it is currently trying to free itself from.
Positive price action since Monday saw bitcoin emerge from its bull flag. However, Wednesday sees price trying to hold the top of the flag. Whether it is successful or not will signal the next phase of price action. If the breakout of the bull flag does get confirmed, bitcoin has the possibility to go much higher, with a measured move out of the flag taking it to $35,000, which would potentially turn $30,000 into new support.
However, failure to break out of the flag can bring bitcoin ever closer to its major support of the uptrend which is underpinned by the 200-day moving average. A bounce here would be even more likely.
Bears and bulls evenly balanced
In fact the chart and fundamentals for bitcoin do look ridiculously bullish. It therefore has to be wondered why there is still so much bearish sentiment around the number one crypto asset?
The Fear and Greed Index has been oscillating around the Neutral 50 value since the beginning of the year, signalling that bitcoin is balanced on a 50/50 market sentiment for higher or lower prices.
It appears that something is needed to tip bitcoin one way or the other, and despite regulatory overhang of the crypto industry and the extremely negative pursuit of the foremost crypto exchanges of Binance and Coinbase by the SEC, there is still enough positive sentiment to balance things up.
Why keep currency in the bank?
In bitcoin’s favour, it does have to be wondered why people would choose to keep their fiat currency in banks. On the one hand there is the resulting reduction in purchasing power of fiat currency as central banks print more of it in order to pay debts.
On the other hand, there are the banks themselves. Only propped up by the printing out of thin air of their own central banks. As exposure to commercial real estate and other bad debts become due, the central banks are going to have to hammer further on the keyboard digits in order to inflate even further.
If one is to add all this negativity to the fact that we are living in an age where banks are becoming obsolescent, then all the currency being poured into propping them up would just appear to lead to much more pain for the average citizen, who must bear this cost through inflation and an accelerating loss in purchasing power.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.