Key Takeaways
- Bitcoin is likely to remain in focus on Wednesday after the cryptocurrency hit another record high around $94,000.
- The cryptocurrency has registered its highest trading volumes since mid-March, signaling buying activity from larger market participants, such as institutional investors.
- A measured move, which calculates the percentage change of Bitcoin’s trend higher from October 2023 to March this year and adds it to the lower trendline value of the cryptocurrency’s recent eight-month trading range, forecasts a price target of $154,000.
- Investors should watch key support levels on Bitcoin’s chart around $70,000 and $55,000.
Bitcoin (BTCUSD) will likely remain on watchlists Wednesday as the largest cryptocurrency by market capitalization nudges towards the $100K mark.
On Tuesday, Bitcoin set a new record high over $94,000, before slightly easing to around $92,000 at the start of Asian trading. Since Donald Trump’s election victory, the cryptocurrency has soared around 35% amid optimism that the incoming administration will establish policies that broadly benefit the asset class.
Sentiment received a boost today following a report that the president-elect’s Trump Media & Technology Group (DJT) is in discussions to buy digital asset marketplace Bakkt (BKKT). Moreover, options trading began on Blackrock’s (BLK) iShares Bitcoin Trust, providing investors with another way to hedge and speculate on the asset’s price.
Below, we take a closer look at Bitcoin’s chart and use technical analysis to identify important price levels to watch out for as the cryptocurrency’s post-election rally continues.
Volume-Backed Rally Accelerates
Bitcoin’s price move has accelerated after decisively breaking out above the psychological $70,000 level earlier this month.
Importantly, the legacy cryptocurrency has registered its highest trading volumes since mid-March in recent weeks, signaling buying activity from larger market participants, such as institutional investors.
While the relative strength index (RSI) confirms bullish price momentum with a reading above 70, the indicator also points to overbought conditions that could trigger near-term dips.
Let’s turn to the chart to forecast a measured move price target and identify two key support levels that may be on investors’ radar screens during pullbacks.
Measured Move Price Target
To forecast a potential price target, investors can use a measured move, also known as the measuring principle.
We apply this technique to Bitcoin’s chart by measuring the percentage move of Bitcoin’s trend higher from October 2023 to March this year and adding it to the lower trendline value of the cryptocurrency’s recent eight-month trading range. For example, we apply a 180% increase to $55,000, which projects an upside target of $154,000.
We selected this prior trending move as it also followed a multi-month trading range in the cryptocurrency.
Key Support Levels to Monitor
During profit taking, investors should keep a close eye on the $70,000 level. This area on the chart would likely attract buying interest near this month’s breakout point, which also roughly corresponds with the prominent November 2021 peak.
Finally, further selling could see Bitcoin drop to around $55,000, a region where the price may encounter support from the recent trading range’s lower trendline.
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As of the date this article was written, the author does not own any of the above securities.