- Bitcoin has led the recovery in cryptocurrency markets this week.
- Fed's indirect monetary policy expansion has boosted demand for risky assets, benefiting Bitcoin.
- Above current price levels, the next resistance levels for BTC are at $26,750, $27,500, and $28,730.
Bitcoin has been on a steep uptrend this week, leading the recovery in the cryptocurrency markets as the possibility of the US banking crisis becoming a global problem is priced in.
Following the Fed's decision to tighten monetary policy in November 2021, cryptocurrency markets began a long-term correction from their peaks. This week's developments have helped spark a rally.
The US Federal Reserve first bought the bonds of the collapsed Silicon Valley Bank and Signature Bank and then opened a discount window for struggling banks for the first time since 2008.
Thus, according to data released yesterday, the Fed's balance sheet expanded by about $300 billion after the bond purchases. This indirect monetary expansion increased the demand for risky assets.
On the other hand, the demand for cryptos, especially Bitcoin, surged after the bank failures. The number of withdrawals to external wallets has also risen significantly.
Against this backdrop, Bitcoin rallied towards $27,000 today, and its uptrend remains intact so far.
After testing $26,000 early in the week, some profit-taking caused BTC to drop to just below $24,000 mid-week. However, it held on to the $24,000 support level, boosting investor confidence.
After briefly lingering at the February high around $24,800-$25,000, BTC broke through resistance with high volume today and climbed to $27,000.
Based on the recent corrective momentum between Feb. 21 and Mar. 10, Bitcoin rallied to the Fibonacci expansion zone boundary between $26,750-$28,730.
The first resistance for the BTC price will be at $26,750, which corresponds to the Fibonacci level of 1,272. This area also coincides with the rising trend line from 2023. Earlier this week, this trendline was tested, followed by a sharp reversal.
If Bitcoin goes into the weekend above $26,750, it could aim for $27,500 and $28,730 as the next resistance levels. In the coming days, BTC may be able to enter the $30,000 band if a floor is formed above these resistances.
In a bullish scenario, Bitcoin could move towards Fib 2.618 after reaching the $27,000 level at $34,300 in the short term, with support from the rising trend line.
BTC currently has bullish momentum with its move above the 3-month exponential moving average (EMA). The steep acceleration of the short-term EMA readings supports the uptrend.
The Stochastic (RSI) is floating in the oversold territory on the daily chart. As long as the indicator remains above 80, it supports BTC's bullish trend. If it drops below this level, a reversal is likely.
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Disclosure: The author doesn't own any of the securities mentioned.