The Bitcoin price is higher in Asian trade, following the news that Twitter users will soon be able to “tip” their favourite creators with BTC. This week, Apple IOS users can add their Bitcoin (BTC) addresses to their accounts and send and receive the digital currency across the social media platform.
The news has helped the Bitcoin price add $1,500 to $45,000 early Friday, well on its way to recouping the heavy losses it suffered earlier in the week. On Wednesday, BTC dropped to a six-week low of $39,600 as risk-assets reacted to the Evergrande default. However, since then, Bitcoin has been in ‘up only’ mode, gaining more than 13%. Furthermore, the two-day recovery has lifted BTC well clear of the 100-day moving average and is setting to clear the 200.
The aggressive move lower in the first half of the week triggered sizeable stop-loss selling and long liquidations. According to Bybt, bullish traders closed positions totalling over $2b notional of BTC on the leg down. This follows the more than $3b sold on the 7th, which could be a bullish catalyst for the Bitcoin price. If BTC continues to climb higher, it could encourage the longs that stopped out to rush back in, forcing the shorts that sold into the weakness to cover, creating additional buying pressure. A possible catalyst for a squeeze is if BTC closes above the 200-day moving average at $45,743. Should that happen, the levels to keep an eye on are $48,200, and following that, the psychological $50k mark.
Below the market, the 100-day moving average is the logical first support level. In Asian hours Wednesday, the Bitcoin price dropped sharply below the indicator in what appears to be an effort to trigger stops. The price quickly recovered, gaining more than $3,000 before settling the day just below, at $40,720 before rallying. Therefore, I would consider the test of the 100 DMA to be successful, which solidifies its importance. On that basis, the Bitcoin price action is constructive as long as it holds above the indicator, now at $40,851. A failure to do so opens the door to $37,000.
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