Bitcoin has notched an eight-day winning streak that has taken the price to above $40,000. The cryptocurrency was trading at $30,000 as recently as July 21 and has been climbing since.
If it ends the day in the green, bitcoin would have its longest winning streak since October 2015.
But as of press time, the largest cryptocurrency was down slightly since 0:00 coordinated universal time on Thursday, slipping back to below $40,000.
“After this eight-day rally, bitcoin may well need to reset as there is a bearish divergence appearing on the short-term frame,” said Laurent Kssis, managing director of exchange-traded products at 21Shares AG.
On bitcoin’s daily chart, price action is playing out as the right shoulder of a head-and-shoulders top formation in a $28,000 to $42,000 range, said Imran Yusof, a technical analyst at Quantum Economics.
Yusof noted that head-and-shoulders top formations are typically bearish.
“This range matches the same range in the left shoulder period from Christmas 2020 to early February, also on the daily chart,” he added.
In order for the bitcoin rally to continue, “more interest is needed from corporate America,” said Edward Moya, a senior analyst at Oanda, an online broker. He believes that acceptance of bitcoin as a means of payment and more firm commitments from institutional investors will further the rally.
The steady rise in bitcoin is a “clear sign that institutional investors are gradually scaling into their longer-term positions,” Moya said.
Moya said planned cuts in the maximum allowed leverage on bitcoin derivatives trades on the Binance and FTX cryptocurrency exchanges might help to damp price volatility, which could help to draw in new investors who were leery of the elevated risk.
The cuts in the leverage limits “should be very supportive for bitcoin‘s longer-term outlook,” Moya said.
“The significance of eight straight days of gains is outweighed by the significance of the aforementioned range, i.e. the will of bitcoin bears pressuring above the $42K resistance versus the will of bitcoin bulls supporting below $28K,” Yusof said.
“If bitcoin can come down and hold above $35K, there’s a better chance that renewed bullish sentiment alone can drive it through $42K later,” he added.