By Samuel Indyk
Investing.com – The price of Bitcoin traded above $44,000 on Thursday morning before edging slightly lower to its current price of $43,650. The world’s largest cryptocurrency by market cap has jumped over 10% since trading below $40,000 on Monday morning.
Bitcoin benefitted from the US inflation reading yesterday. The consumer price index increased 7.0% in December from a year earlier, the fastest rate of inflation in almost 40 years.
Although this might have previously weighed on the price of Bitcoin and other riskier assets, cryptocurrency prices increased after the data as markets appeared primed for a higher-than-forecast number.
Some of the components also showed signs of easing. Once again, the increase was driven by shelter prices and used vehicles, but energy prices actually fell in December, the first monthly decline since April.
Some also view Bitcoin as a hedge against inflation due to its limited supply. Only 21 million Bitcoin will ever enter circulation, however, with thousands of coins on the market, it may be hard to argue about the overall limited supply of cryptocurrencies.
As mentioned previously, a ‘death cross’ looks imminent on the Bitcoin daily chart. A ‘death cross’ occurs when a short-term moving average (the 50-day) drop below a long-term moving average (200-day).
The 50-day moving average is converging on the 200-day with the 50-day at around $48,770 and the 200-day around $48,400.
A ‘death cross’ often signals a bearish trend. The last time the pattern was observed was on 18th June last year. Bitcoin hit a low four days later but prices remained subdued until the end of July.
To the downside, the psychological $40,000 level could continue to act as support after Bitcoin failed to make a clean break below that level on Monday.
To the upside, if Bitcoin manages to hold above $44,000 it would open the door to $45,000. Above that level and the aforementioned 50- and 200-day moving averages could act as resistance.
The next major resistance is seen at the $50,000-$52,000 zone, whereby a break above could signal an end to the bearish trend.
Bitcoin heads higher. Is the selling over?
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