Bitcoin (BTC) spiked to multi-month highs Monday likely due to a sell-off in tether (USDT), but a bullish reversal is still not confirmed, technical charts indicate.
The leading cryptocurrency jumped to a 2.5-month high of $7,788 at 06:45 UTC on Bitfinex – the cryptocurrency exchange, which manages Tether LLC, the firm that developed the USDT token.
Interestingly, the stablecoin USDT was down 2 percent just before BTC picked up a bid at 05:00 UTC and fell further to an 18-month low of $0.925284 at 07:00 UTC, as per CoinMarketCap.
Investors seem to have moved money out of USDT and into bitcoin and other cryptocurrencies on a fresh round of doubts over whether the stablecoin is fully backed by dollars.
Further, some amount of money may have found its way into emerging stablecoins like Paxos Standard (PAX), TrueUSD (TUSD) and Gemini Dollar (GUSD). Moreover, these cryptocurrencies reported gains during USDT sell-off.
More importantly, the majority of trading likely happened on Bitfinex, where prices rose well above $7,000. Notably, the premium carried by bitcoin prices on Bitfinex rose above $600 in early Europe. Meanwhile, on non-tether-enabled platforms like Coinbase’s GDAX, BTC only peeped above $6,800.
At press time, BTC’s average price across various exchanges, as calculated by CoinDesks’s Bitcoin Price Index (BPI), is $6,510, representing a 4.6 percent gain on a 24-hour basis.
On Bitfinex, the leading cryptocurrency is trading at $6,837, while on Coinbase, it is changing hands at $6,824, meaning BTC is still trading at a premium of $400 on Bitfinex.
As seen in the above chart (prices as per Coinbase), BTC’s rally has neutralized the immediate bearish view put forward by last week’s downside break of the rising trendline.
However, a bullish reversal would be confirmed only after the cryptocurrency has found acceptance above the Sept. 4 high of $7,402.
Moreover, bulls are not out of the woods yet as the following key resistances are still intact:
- $6,462 (trendline falling from July highs)
- $6,823 (Sept. 22 high)
- $7,090 (Trendline connecting March highs and July highs)
Meanwhile, a major support is seen at $6,150 (today’s low), $6,000 (February low) and $5,777 (June 24 low). So, it seems safe to say that there is more room on the downside than upside.
- The immediate outlook on BTC is neutral and the pullback from highs above $6,800 has kept the bears in the game.
- A UTC close above $7,090 (long-term falling trendline) would boost the prospects of bullish reversal above $7,402.
- On the downside, a move below $6,150 (today’s low) would put the bears back into the driver’s seat, allowing a drop to June lows below $5,800.
Disclosure: The author holds no cryptocurrency assets at the time of writing.