- Bitcoin has surged close to $25k and is trading close to its highest for the year.
- The current rally of Bitcoin is diverging from US Dollar strength.
- For further upside, the EUR/USD needs to regain 1.10.
Bitcoin investors must be thrilled as the leading cryptocurrency trades close to $25k. It is a new high for the year and a significant development for Bitcoin for at least three reasons. First, with the recent movement, Bitcoin returns for the year are close to 50%. Considering that we are only in the middle of February, that is no small achievement. Second, Bitcoin broke the previous high while maintaining a series of higher lows. That is indicative of further strength. Third, the recent upside came in a total divergence with the US dollar. The dollar gained after the inflation report released last Tuesday, as seen by the USD/JPY trading above 134 or the EUR/USD trading below 1.07. But Bitcoin did not follow the same path, diverged, and the price exploded higher.
All these put the recent Bitcoin rally in a positive light. Moreover, if we add that climbing close to $25k Bitcoin invalidated a head and shoulders pattern, which makes it even more bullish.
What Needs To Happen?
The chart shows Bitcoin’s performance compared to EUR/USD currency pair. While Bitcoin gained 49% YTD (year-to-date), EUR/USD pair is almost flat during this time frame period.
For further gains of BTC price there must be some reversal of EUR/USD losses recently happened – when it dropped from 1.10 to 1.07 level – and move back up towards 1.10 mark again.
If this happens then one should not be surprised if BTC trades closer or even above $30k mark.
The US dollar gained after an inflation report was released last Tuesday; USD/JPY traded above 134 level and EUR/USD moved lower than 1.07 mark.
However BTC didn’t follow these trends but instead skyrocketed significantly upwards suggesting that it could lead USD weakness if EUR/USD manages to reverse recent losses.
Head and Shoulders Pattern
Climbing near $25k level invalidated a Head and Shoulders pattern which also increases bullish outlook on BTC price going forward in time.