Bitcoin Acceptance Builds Confidence; Currency Near US$9,000 Mark

  • May 28, 2019 AEST
  • Team Kalkine
Bitcoin Acceptance Builds Confidence; Currency Near US$9,000 Mark

Bitcoin prices are on an upward trend from the level of US$3426.9 (low in February 2019) to the present level of US$8748.2 (as on 28th May 2019, AEST 5:49 PM). The gain in bitcoin prices now marked a fourth consecutive monthly rise from its February low of US$3426.9; the highest gains in the prices of the cryptocurrency occurred in May 2019.

The high gain in bitcoin prices is majorly attributable to the increase in acceptance of the digital currency as a mean for the financial transaction. AT&T, a multinational conglomerate recently announced that the company would allow its customers to pay bills with the digital currency.

Apart from the acceptance, the increase in the number of service providers in the digital market is raising optimism among market participants as well. Last month, San Juan Mercantile Bank & Trust International offered the custodial services for cryptocurrencies, which in turn, supported the bitcoin as well as other cryptocurrencies such as Ripple, Litecoin, etc., in the international market.

The bitcoin is again gaining popularity among investors amid high acceptance. The emergence of derivate product providers is also adding value to the assets by adding liquidity in the digital currency market. Players such as Cboe and Chicago Mercantile Exchange (CME) are offering the derivative products in the market, which, in turn, is building confidence among investors.

However, a large proportion of retail investors are still reluctant to jump in the market as the prices are still below the December 2017 level of US$19891.0. The sudden drop in bitcoin prices from its December 2017 high marked a significant loss in the capital for many retail investors.

Institutional investors and a majority of hedge funds are still betting on the digital currency uprise as many fund houses believe that the high acceptance and the emergence of latest technology would eventually mitigate the problem associated with the cryptocurrencies.

Technical Outlook:

Bitcoin Daily Chart (Source: Thomson Reuters)

On following the development on daily chart, the bitcoin prices recently broke the level of US$4280, which was acting as a strong resistance for the prices. The prices breached the resistance level post marking a short-term Golden Cross-over (bullish signal) of 7 and 20-days exponential moving averages, encircled by a pink contour on the chart above.

The emergence of the short-term golden cross-over marked a sudden spike in the RSI value (14), which signifies an immediate buying interest. The value of RSI rose from the level of approx. 35.626 (as on 7th February 2019) to the value of approx. 61.165 (as on 9th February 2019).

The buying interest prompted prices to cross the resistance level (shown with a yellow line). After crossing its resistance, the prices of bitcoin marked the presence of a medium-term golden cross of 20 and 200-days exponential moving averages (purple circle), and the prices rose significantly post the cross over.

However, considering the recent price development, the Relative Strength Index (RSI) of 14-days is showing a negative divergence (prices made a new high, while the RSI did not) on the daily chart, which could further signify a possible short-term price correction. But the prior uptrend remains intact.


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