Bitcoin looks to be on the brink of a major breakout as it coils up just beneath the crucial $7,000 level of resistance.
The test of $7,000 comes after a volatile trading session that saw Bitcoin surge from $6,600 to $7,300 before being met with a substantial sell-off.
Bearish pressure eventually pushed price back below $6,800, although a bounce this morning has lifted it back into a bullish posture.
If Bitcoin can close Friday’s daily candle and Sunday’s weekly candle above $7,150 it would confirm a bullish breakout, which would pave the way towards continuation to the upside.
Potential targets begin to emerge at both $7,400 and $7,850 if a breakout is to come into fruition, while a rejection from this point would likely see Bitcoin slide back to the $6,200 level of support.
Bitcoin halving priced in?
Bitcoin’s recent bullish behaviour has led speculators to question whether next month’s halving event has already been priced in by traders, or whether it will rally this month in anticipation.
The block reward halving will see rewards for miners cut from 12.5BTC per block to 6.25BTC per block, thus reducing supply of Bitcoin coming onto the market.
While this has historically been a positive event for Bitcoin it could take a turn for the worse if the theory of miner capitulation rears its head.
The theory states that if Bitcoin drops to surprising lows, miners will be forced to shut up shop and cut losses as they won’t be able to cover overheads, electricity and loan repayments.
If a large section of the mining pools exit the market it will make the Bitcoin blockchain far less secure, increasing the risk of a 51% attack.
As Bitcoin moves into the typically low-volume weekend there are a couple of key levels to look out for. As previously stated breaking above $7,150 would be extremely bullish in the short-term with price targets at $7,650 and above $8,000.
However, failure to make a new high would indicate a clear lack of bullish momentum, which could be the trigger for a continued downtrend to test yearly lows.
The key level of support to look out for is $5,900, which has been established over the past two years, notably during the 2018 bear market
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