FX.co ★ Bitcoin recovers above $48k and made bullish breakout: what are the key targets for further upward movement?

Bitcoin starts another trading day with a positive, namely with a successful bullish breakout of the upper border of the local descending channel. The successful storming of the resistance zone brought additional positiveness to the market, which started talks about a possible trend change. Don't think of me as a bear, but in order to talk about a full-fledged reversal of the direction of movement, Bitcoin needs to continue its upward movement and conquer two more important levels.

As of December 21, Bitcoin managed to rise in price by 7% and gain a foothold above $49k. Other assets then followed, increasing the total market capitalization by 6.5%. Bitcoin managed to break through the local downward trend lines from December 7, thanks to the confident development of the wedge pattern formed over the past 7 days.

The confident bullish momentum was accompanied by encouraging news that the amount of Bitcoins held on wallets reached an 11-month high. The indicator is equivalent to 34.4% of the total BTC volumes, which is a positive signal.

Has Bitcoin finally started to recover?

Despite the important bullish signal, I cannot be one hundred percent sure that the asset has returned to the recovery path. Too little time has passed between the massive sale of coins in Asia, and therefore we can expect a local rebound after an impulse growth. At the same time, the demand for BTC futures continues to grow, and retailers are returning to the asset.

However, it would be a mistake to assume that investors could absorb such large amounts of coins in a few days. To confirm the bullish sentiment of BTC, it is necessary to hold the support zone at $48.3k, where the 0.382 Fibonacci level (green) passes. Consolidation above this milestone will be a local, but important confirmation of the beginning of the recovery phase of quotes.

Low-key optimism

However, in order to fully exit the complex area, Bitcoin needs to overcome two important milestones. The first target is located at the round mark of $50k, where the 0.5 Fibo level also passes, which makes this mark especially difficult. Previous attempts to break through this line became a real stress for buyers and turned into another price drop.

Consolidation above this mark will move the price to the next level at $52k, where the 0.618 Fibo level passes. If it successfully consolidates above this mark, the price will completely go beyond the wide range of fluctuations of the last three weeks (yellow). However, the broader context and comparison with previous cycles is worrying.

Parallel with May 2021

A similar pattern of Bitcoin price movement could be observed during a long consolidation in May-June 2021. Then the cryptocurrency also successfully worked up the wedge, but subsequently fell back into the range of fluctuations. Taking into account the cyclical nature of the market, it will be possible to talk about the beginning of the recovery period of BTC/USD quotes only if it successfully goes beyond the range of $48k-$52k, which is now the main one. Otherwise, the cryptocurrency risks falling again into a wide area of consolidation with a smooth decline, and Bitcoin at $60k at the end of 2021 will remain a dream.