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Yesterday’s erroneous report that the SEC had approved the IShares Spot Bitcoin ETF sent bitcoin to over $30,000 in the space of an hour, before crashing back down again.

Market reacts

We now know the type of behaviour the market will exhibit if and when a Spot Bitcoin ETF is approved in what might hopefully be the near future. A more than $2,000 surge that was only stopped by denials that the event had happened. Who knows how far that pump could have gone had the news been true?

Of course, this sort of price action is only hype and speculation, and will possibly have raised some eyebrows among institutions that are looking into the cryptocurrency space. This sort of manipulative behaviour must certainly be frowned upon.

Bitcoin holding above 200-week moving average

Be that as it may, Monday’s glorious surge definitely breathed some life into a reasonable stagnant crypto market. Bitcoin is still above the 200-week moving average, which in the grand scheme of things is an absolute must if bitcoin is to carry on the rally it has experienced since September 11.

It might have been expected that the bitcoin price would crash further down, especially given that short term momentum indicators are topping out. However, bitcoin is currently still holding strong after returning to test the 200-day moving average.

Now sitting atop support of the 200-day and 200-week, plus the present price level of $28,400, perhaps there is the chance that bitcoin can carry on up and test the top of its long term upward channel.

Source: Trading View

A bearish chart pattern

Having said that, yesterday’s sharp upward and then downward movement left a tall wick behind. This has now helped to form a classic head and shoulders chart pattern, which is bearish, and should it play out, would take bitcoin back to around $18,000.

If this were to happen this would be a case of bitcoin returning to test its bull market base

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Author: Laurie Dunn

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