$ 60,000 is now more likely for Bitcoin than $ 20,000, says Bloomberg senior strategist

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Bitcoin (BTC) has a better chance of returning to $ 60,000 than falling below its current support level of $ 30,000 to target $ 20,000, believes Mike McGlone, senior commodities strategist at Bloomberg Intelligence.

A screenshot of McGlone’s latest analysis on the flagship cryptocurrency, first shared by Bloomberg’s senior ETF analyst Eric Balchunas, shows him comparing the ongoing price action. Bitcoin with the “too cold” period of the 2018-2019 trading session.

In detail, the BTC / USD exchange rate entered a prolonged consolidation period of nearly $ 4,000 after a crash of more than 80% in 2018, but a sudden rise in 2019 pushed its prices up to $ 14,000 on certain scholarships.

McGlone, who is known for his previous Bitcoin bullish call, noted that BTC, which has consolidated nearly $ 30,000 since May, could show an equally surprising rally while aiming for an updated resistance target of nearly $ 60,000.

“More tactical bears appear to proliferate when Bitcoin holds about 30% of the threshold below its 20-week moving average, allowing time for buy and hold types to accumulate,” the strategist wrote.

The moving average trio

Bitcoin’s bearish and bullish cycles appear to hover around three key moving average indicators: the 20-week exponential moving average (20-week EMA; the green wave), which serves as interim support / resistance, the simple moving average over 50 weeks (50 -week SMA; the blue wave) and the 200-week simple moving average (20-week SMA; the orange wave).

Bitcoin’s bearish trends tend to run out after the BTC price tests the 200-day simple moving average as resistance. Source: TradingView

During bullish trends, Bitcoin prices generally stay above the three moving averages. Meanwhile, the downtrends see the cryptocurrency’s prices closing below the 20-week EMA and the 50-week SMA, as seen in the chart above.

The 200 week SMA usually serves as the last line of defense in a bear market. Bitcoin has hit bottom twice near the orange wave so far, each time causing prices to explode. For example, a 200-week SMA takeoff in 2018 drove Bitcoin prices close to $ 14,000.

Likewise, wave support limited attempts to drop the cryptocurrency during the crash caused by COVID-19 in March 2020. Later, the price rose from $ 3,858 to over $ 65,000.

Bitcoin is now on its third drop below this trendline since 2018. The cryptocurrency has moved below the 20-week SMA (nearly $ 39,000) and is now targeting the 50-week SMA (around $ 32,200). ) as support. If the old fractal repeats itself, it should continue to decline towards the 200 week SMA (approximately $ 14,000).

However, McGlone believes there could be an early rebound. 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 blocked mining operations in the country, which were forced to cease or move their base abroad. Bitcoin prices have fallen sharply in response.

Nonetheless, McGlone pointed to China’s rejection of open source software crypto assets as a plateau in their economic ascent. In a tweet posted on Friday, the analyst attached an index showing booming volumes and capitalization of US dollar-backed digital assets, including Tether (USDT).

He then contrasted the growing demand for digitized dollars against the yuan-Chinese dollar exchange rate, noting that the log scale of market capitalization fluctuations between the two fiat currencies was below the benchmark zero between 2018 and 2020. This means that the yuan depreciated. against the dollar.

Tether appreciates against the US dollar index and the Chinese yuan. Source: Bloomberg Intelligence

The scale has just returned above zero, signaling intermediate growth of the yuan against the dollar. But its uptrend still seemed overshadowed by Tether, whose market cap rose more than 40% above baseline. McGlone noted:

“China’s rejection of open source software cryptoassets could mark a plateau in the country’s economic rise, we believe while touting the value of the US dollar and Bitcoin.”

Additionally, Petr Kozyakov, co-founder and CEO of the global payments network Mercuryo, noted that although the United States government has not officially launched a central bank-backed digital dollar like China has , the availability of many other alternatives including Tether, USD Coin (USDC) and Binance USD (BUSD) could pose a challenge for the China-controlled digital yuan.

“These cryptocurrencies are pegged 1: 1 against the US dollar and as the chart shared by McGlone shows, the dollar is leading the numerical rise against the Chinese yuan,” Kozyakov said.

“While the Chinese crackdown impacted the price of Bitcoin as it surpassed $ 30,000 on June 23, fundamentals have improved significantly since 2018 due to institutional FOMO. […]Bitcoin is expected to rebound to $ 50,000 by the end of the year. “The Chinese economy will continue to grow

However, dismissing McGlone’s position, CEX.IO Broker’s Yuriy Mazur noted that the Chinese economy should continue to thrive with or without cryptocurrencies, saying it has nothing to do with the demand for digital assets.

Related: US-China Trade War And Its Effects On Cryptocurrencies

“The Chinese government is too smart to miss out on something the world considers valuable,” Mazur told Cointelegraph.

“So, expect them to take significant steps to deploy yuan-backed cryptocurrency (in the future) over which they have full control.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should do your own research before making a decision.

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