The Bitcoin price rally accelerated today as demand for the cryptocurrency kept rising. BTC managed to cross the important resistance at $40,000 for the first time since Friday last week. It has already recovered by more than 35$ from its lowest level last week. According to CoinMarketCap, its market capitalization has risen to more than $768 billion.
What happened: Bitcoin price dropped last week because of three key reasons. First, there was the rising fear of high interest rates as data showed that the US inflation was rising while the labour market was tightening. Second, there was a sell-off as Americans sold their investments for tax reasons. Third, there is the lingering fear that Chinese authorities will crackdown on cryptocurrencies. This is after the People’s Bank of China (PBOC) warned financial entities against cryptocurrency transactions.
This week, though, Bitcoin price has bounced back as demand for the coins rose because of investors who were buying the dip. Analysts believe that many investors who made substantial losses last week have come back in as they try to recoup some of their losses. Also, the fears of high inflation have eased, as evidenced by the performance of growth stocks, the US dollar, and bond yields.
Bitcoin price forecast
The four-hour chart shows that the BTC price has made a modest recovery in the past few days. Along the way, the curency has managed to pass the 23.6% Fibonacci retracement level at $38,126. It is also approaching the 38.2% retracement level at $43,174.
Most importantly, it has managed to move above the important resistance level at $40,000. This is a sign that more buyers are coming back. Also, the BTC/USD pair has formed an inverted head and shoulders pattern.
Therefore, in my view, Bitcoin will keep rising as bulls target the 38.2% retracement level at $43,174. However, a drop below the 23.6% retracement level will invalidate this trend.