Amid more violence in the US and increasing tensions with China, Bitcoin has finally broken through the key resistance level of $10,000
Bitcoin, whose price was consolidating in the $8,600s last week, yesterday broke above $10,000 dollars in a huge price spike. The price has been following an ascending parallel chain pattern since its mid-March woes. Yesterday’s price movement was important in maintaining this pattern.
For the pattern to be maintained, Bitcoin will now have to target higher resistance levels to reach the upper end of the pattern. This falls in line with many commentators’ opinion that $10,000 dollars would be a significant level to break. More importantly, it has been suggested that once it was broken, it would be time for people to start holding as the bulls take control.
It should be noted that the price has corrected back down to just over $10,000, compared to its initial breakout height of $10,371. Importantly for Bitcoin, key levels of support are developing in the high 9,000s, as lots of new investors have bought in at those levels.
To put it simply, much of what has been happening in the past few weeks is finally coming to ahead. A combination of coronavirus-affected markets, worsening US-China relations and most prominently the widespread protests occurring in the US are driving investors to look for an asset not dependent on the dollar.
China has reportedly banned its farmers from purchasing US produce. This would include goods such as soybeans. Undoubtedly in response to the US’ backing of Hong Kong protestors, this tit for tat exchange will only serve to escalate tensions further and could spark another trade war. Investors only have to glimpse at the trade war of 2019 to see that Bitcoin would be a good bet in that race. It appears this time around they are looking to get in early.
In the US itself, as protestors continue to draw attention to the horrors of police brutality, President Trump has vocally called on governors to make full use of the police and national guard. Such draconian measures come after particularly vociferous riots occurred outside the White House, which at one point caused Trump to be taken underground to a bunker.
All of these factors are driving investors to look for non-dollar based assets, and Bitcoin is a viable option.
What will happen next in the US is hard to say. It seems that a large part of the country has had enough of their president and of the systematic bias towards white men. When and in what fashion the protests will come to an end is anyone’s guess.
US-China relations are perhaps more predictable. Trump won’t want to seem weak domestically as well as in global affairs. He has an election to try and win this November. On past performance, it would be reasonable to argue that he will retaliate against China, thus doing Bitcoin a favour.
Whether Bitcoin drops again below $10,000 is not a major problem, it is whether it finds these high levels of support in the upper $9,000s that will be the decisive factor for future price action.