After a long range-bound period, BTC/USD finally rallied yesterday. Bitcoin gained $8 dollars and we peaked at $253.36.
Bitcoin Rallies but $250 Still in Play
Bitcoin is in full rally mode but the key $250 figure has yet to give way. Yesterday’s push stopped short at $253. We are currently trading right at the $250 mark. The strong momentum higher means that the figure will likely be broken soon but the conservative approach calls for waiting until we trade past $254/$255 dollars per coin.
The first weak resistance higher can be found at $258, this was an April swing high for the crypto. But given the closeness to the current breakout point at $250-$255, if prices manage to head higher, it’s unlikely they will be stopped by $258. Higher up, the $270 mark is another important swing high. Further to the upside, the round $300 level is a key number to watch. This triple top stopped two previous BTC rallies. A surge past it would exacerbate the gains. On the lower end, a break below the $222 swing low would end the downtrend.
Caused by Grexit Worries?
The media are trying to tie in the breakdown in Greek negotiations with the bitcoin rally. Major media outlets like Reuters and Zerohedge have published articles in the same vein. The story goes that as the odds for a Greek default increase, ordinary citizens of that country will turn to bitcoin in order to avoid capital controls or protect savings. The articles allude that this is what happened back in 2013 when Cyprus instituted capital controls.
There are several problems with this thesis. The first one is that the breakdown in talks and potential default is not discounted in the regular capital markets. For example, the Greek 2 year note is currently trading at 29%, while this is high, it does not default level high. Furthermore, the Euro today closed down by only 0.3%, a far cry from panic mode.
This doesn’t mean that a Greek default won’t happen. Markets have mis-priced major events before. But to believe this theory would mean that the cryptocurrency markets are more efficient than the regular capital markets. This just isn’t the case, at least not at this stage. A more plausible scenario is that BTC prices are in the process of making a technical breakout after a long range-bound period.
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