Feb 8, 2021 4:02 PM EST Original: Feb 8, 2021
Bitcoin prices are flying on Monday, up more than 10% to records.
In fact, the entire cryptocurrency space is moving higher, with etherium, bitcoin cash and others rallying as well.
Helping jolt the group higher is Tesla ( TSLA ) – Get Report . The company bought $1.5 billion of bitcoin , according to a recent Securities and Exchange Commission filing.
This follows MicroStrategy’s ( MSTR ) – Get Report decision to begin buying gobs of bitcoin in late 2020, a move that has paid off incredibly well for the company.
With hedge funds, reputable traders like Paul Tudor Jones and now companies like Tesla getting involved in bitcoin, investors are wondering how much potential the crypto industry could have.
If just a fraction of top corporations put a small percentage of their cash holdings in bitcoin, it could drive significant gains in the asset. Let’s look at the charts. Trading Bitcoin Daily chart of bitcoin. Chart courtesy of TrendSpider.com
When I last looked at bitcoin a few weeks ago, it was undergoing a very healthy consolidation on both a daily and a weekly basis.
We’re seeing that consolidation resolve to the upside, although it didn’t take Monday’s explosive rally to get the party started.
Bitcoin peaked near $42,000 in early January before pulling back. That dip ultimately retested the 261.8% extension twice and held that mark firmly both times. Further, the 50-day moving average acted as strong support.
Bitcoin then broke out over downtrend resistance (blue line) and reclaimed the 10-day and 21-day moving averages. That said, it did have trouble with the higher end of its range — until Monday.
With today’s rally, bitcoin burst over last month’s high, giving the cryptocurrency not only new all-time highs but a monthly-up rotation.
The move sent shares to the four-times range extension near $43,050 and nearly to the 423.6% extension at $45,360.
These extensions measure from the January 2020 low to the 2019 high and have been quite accurate in navigating bitcoin over the past several months.
If it can clear the 423.6% extension, things will get interesting. Specifically, it could put the 461.8% extension in play, up near $49,090.
At that point, the key $50,000 level will be on investors’ minds. And not to get too confusing, but the 161.8% extension from the most recent range — as measured from the low near $29,000 in late January to the high at $42,000 — sits at $49,990.
With those extensions in mind, $50,000 seems within reach if bitcoin can clear $45,360. Tags
