- BlackRock’s ETF filing put a complete stop to Bitcoin’s price decline.
- Bitcoin is overbought, which has historically been price positive.
Bitcoin (BTC) has a bullish signal in multiple technical indicators. The “BlackRock Pivot” (Bitcoin price reversal due to BlackRock’s bitcoin ETF filing) extended to Day 7.
The question for investors is whether this is a long-term change, or a short-term correction before another downturn.
Reached highest price since April
Bitcoin rose more than 7% on the 21st. It broke the $30,000 psychologically important level at its highest since April this year. For the second day in a row, the upper end of the Bollinger Bands was broken, signaling a bullish trend.
Bitcoin trading volume has risen above the 20-day moving average for the third consecutive day, with dominance (Bitcoin’s share of total cryptocurrency market capitalization) reaching 51.6%.
The rally follows two perhaps the most important events in cryptocurrency in 2023.
The first is that the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against major crypto asset (virtual currency) exchange Binance on June 5 and Coinbase on June 6.
Second, last week, BlackRock, the world’s largest asset manager, applied for a Bitcoin exchange-traded fund (ETF).
Bitcoin’s price fell 5% in two days following the SEC’s lawsuit, a 16% drop that began in April. However, the situation has turned 180 degrees with BlackRock’s Bitcoin ETF application. It rose 1.3% following the announcement and another 17% thereafter.
Is BlackRock’s ETF filing a tipping point?
It’s worth noting what happens next. BlackRock’s ETF filing could mark a pivotal tipping point for crypto in 2023 and beyond. The following three points should be noted.
- BlackRock’s entry improves Bitcoin’s reputational risk. As the world’s largest asset manager expands its crypto efforts, it will be difficult to deny the merits of Bitcoin.
- If BlackRock’s ETF is approved, it will add a large number of buyers to the market. ETFs require you to buy bitcoin.
- If the application is approved, it will serve as a framework for similar projects by other large asset managers, and the application may be successful. Although unrelated to ETFs, the launch of a cryptocurrency exchange backed by the likes of Fidelity Digital Assets and Charles Schwab, as well as the announcement of Deutsche Bank’s cryptocurrency custody business plan, have been associated with TradFi. This is yet another piece of evidence that (traditional finance) is slowly entering crypto-assets.
Overbought could lead to further rise
Bitcoin’s Relative Strength Index (RSI) has crossed 70 as the price rises. This is traditionally a sign that the underlying asset is in an “overbought” state. However, historically this has not been the case with Bitcoin.
Since 2015, Bitcoin’s RSI has crossed 70 70,416 times. Over the next 30 days, the price increased by 13.5%. In the 65 times the RSI has been in the 72-74 range since 2015, the price has risen 12.9%.
By comparison, Ethereum (ETH) rose just 3.3% over the next 30 days after an RSI reading above 70. This suggests that bitcoin tends to go higher over the long term, even if it is technically overbought.
On the other hand, bearish investors who do not believe history will repeat itself may see a price target of $27,000, which coincides with Bitcoin’s 20-day moving average.
However, the importance of BlackRock’s announcement, rising trading volumes and bitcoin’s tendency to be overbought may upset bearish investors’ expectations.
｜Translation: coindesk JAPAN
｜Editing: Rinan Hayashi
| Image: Bitcoin price since 2015 (CoinDesk)
｜Original: ‘BlackRock Pivot’ Continues, as Bitcoin Rises on Increased Volume