The price of Bitcoin rose sharply in a relief rally that helped boost the value of major cryptocurrencies by more than $20 billion. While the price of Bitcoin alone rose by more than 15%, this increase was synchronized among all major cryptocurrencies.
The upward movement in Bitcoin came after a week of sharp declines. Over the past week alone, the price has declined by more than 30%.
The question among traders is whether this relief rally will continue. Others are asking whether the recent decline marks the beginning of the end of cryptocurrencies. The current rally is mostly supported by technical traders and not fundamental traders. Often, investors tend to buy securities after a sharp decline because they believe the decline was an overreaction.
Even with the rally, the price of Bitcoin remains quiet cheap, after falling by more than 68% this year. The year started with a lot of optimism for cryptocurrencies with a number of analysts forecasting that the price would rise sharply to more than $1 million – but this hope was tarnished by regulation worries. At the same time, Google and Facebook announced that they would stop advertising ICOs. This was followed by crypto hacks that have seen more than $800 million worth of crypto stolen.
The BTC/USD pair is now trading at 4140, which is a major improvement from last weekend’s low of below 3500. The pair’s RSI has climbed from below 30 to the current 51. At the same time, the 30-day EMA appears to be crossing the 50-day EMA on the four-hour chart below. Therefore, while these are bullish indicators, you should be cautious about bullish trades. This is because it is likely that the pair will resume the downward trend.
