Mike McGlone, Senior Commodity Strategist at Bloomberg Intelligence, believes that Bitcoin (BTC) has a better chance of rallying back to $60,000 from its current support level of $30,000 than breaking the $20,000 target.
A screenshot of McGlone’s latest analysis on the flagship cryptocurrency, first share Eric Balchunas, senior ETF analyst at Bloomberg, shows him comparing bitcoin’s ongoing price action with the “very cold” period of the 2018-2019 trading session.
In detail, the BTC/USD pair entered a prolonged consolidation period near $4,000 after a more than 80% crash in 2018, but a sudden rally in 2019 pushed its price to $14,000 on some exchanges.
McGlone, known for his previous bullish calls on bitcoin, pointed out that BTC, which has been consolidating near $30,000 since May, is aiming to hit a fresh resistance target near $60,000. Could post similarly surprising rally.
“When bitcoin remains approximately 30% below its 20-week moving average, a more tactical-trade-oriented bear spread occurs, thereby accumulating buy-and-hold time,” the strategist wrote.
moving average trio
Bitcoin’s bearish and bullish cycle appears to be erratic around three key moving average indicators: the 20-week exponential moving average (20-week EMA; green wave), which acts as interim support/resistance, 50-Week Simple Moving Average (50)-week SMA; blue wave), and the 200-week simple moving average (20-week SMA; orange wave).
During bull trends, bitcoin price usually stays above the three moving averages. Meanwhile, the cryptocurrency prices in a bear trend close below the 20-week EMA and 50-week SMA, as shown in the chart above.
The 200-week SMA usually acts as a last line of defense in a bear market. So far, bitcoin has fallen down near the orange wave twice, each time sending the price explosively higher. For example, in 2018 a take-off from the 200-week SMA drove the bitcoin price to around $14,000.
Similarly, wave support limited the cryptocurrency’s downside efforts during the COVID-19-led crash in March 2020. Later, the price declined from $3,858 low to above $65,000.
Bitcoin is now in its third decline below this trendline since 2018. The cryptocurrency broke below the 20-week SMA (close to $39,000) and is now targeting the 50-week SMA (around $32,200) as support. If the old fractal repeats, it should continue to decline towards the 200-week SMA (around $14,000).
McGlone, however, believes there may be a return soon. As a bullish fundamental, the strategist pointed to the recent crypto ban in China.
Tether Takes the Cake
Beijing announced a complete ban on cryptocurrency operations in May. The decision disrupted mining operations in the country, which were forced to either shut down or move their base outside. The price of bitcoin fell sharply in response.
Still, McGlone highlights China’s rejection of open-source software crypto assets as a plateau in its economic upswing. in a tweet published On Friday, analysts attached an index showing the increasing volume and capitalization of US dollar-backed digital assets, including Tether (USDT).
He then observed rising demand for the digitized dollar against Chinese yuan-to-dollar exchange rates, noting that the logarithmic scale of market capitalization fluctuations between the two fiat currencies between 2018 and 2020 was below zero at the baseline. This means that the yuan was depreciating. against the dollar.
The scale just moved above zero, indicating an interim rise for the yuan against the dollar. But its uptrend still appears dwarfed by Tether, whose market cap has risen by more than 40% from the baseline. McGlone noted:
“China’s rejection of open-source software crypto-assets could mark a plateau in the country’s economic growth, we believe, praising the value of the US dollar and bitcoin.”
Additionally, Petr Kozyakov, co-founder and CEO of global payments network Mercurio, said that the United States government has not officially launched a central bank-backed digital dollar as in China, but the availability of several other options – Tether, USD Coin, etc. (USDC) and Binance USD (BUSD) – could pose a challenge to the Chinese-controlled digital yuan.
“These cryptocurrencies are pegged at 1:1 against the US dollar and as shown in the chart shared by McGlone, the dollar is leading the digital rally over the Chinese yuan,” Kozyakov said.
“While China’s action has had an impact on the price of bitcoin as it surges above $30K on June 23rd, fundamentals have corrected significantly since 2018 due to institutional FOMO. […] Bitcoin should recover to $50K by the end of the year.”
Chinese economy will continue to grow
However, dismissing McGlone’s opinion, CEX.IO broker Yuri Mazur said that the Chinese economy should continue to flourish with or without cryptocurrencies, adding that it has nothing to do with the demand for digital assets. .
Connected: The US-China trade war and its impact on cryptocurrencies
“The Chinese government is too smart to miss something the world considers valuable,” Mazur told Cointelegraph.
“Therefore, expect them to take considerable measures to roll out yuan-backed cryptocurrencies (in the future) over which they have complete control.”
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