Bitcoin price launches 10% rally on Musk comments, but big BTC challenges remain

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  • Bitcoin price rally pierces the declining trend line of a governing symmetrical triangle pattern.
  • BTC now up 27% from the successful June 8 test of the May panic lows.
  • Elon Musk looking for confirmation of clean energy usage to resume Bitcoin transactions.

Bitcoin price breakout from the symmetrical triangle is a bullish development, as it frees the bellwether cryptocurrency to test the formidable resistance between $41,581 and $43,331, offering some encouragement for the broader cryptocurrency complex. Nevertheless, it is imperative to focus on the bigger technical picture and the challenges it highlights for BTC.  

Bitcoin price sustainability requires more than a tweet

Today, using Twitter, Elon Musk informed the interested public that “when there’s confirmation of reasonable (50%) clear energy usage by miners with positive future trend, Tesla will resume allowing bitcoin transactions.” The tweet was prefaced by a response to the chief executive of South African financial services company Syngia that criticized Elon Musk for an alleged pump and dump.

 

It is tough to locate a firm estimate on how much energy is powering the bitcoin network. Still, a report from the Cambridge Centre for Alternative Finance in September 2020 indicated that renewable energy sources supplied less than 40% of the energy consumed. Based on that, it seems that the 50% is attainable, but not soon, mainly when a lot of the mining is conducted in underdeveloped countries that still employ fossil fuels for electricity generation.

Moving on from Musk and energy, to the charts. The breakout from the symmetrical triangle does demand a rethink of the pervading neutral-to-negative outlook that has orchestrated Bitcoin price for several weeks. With that said, BTC does face a few obstacles to a sustainable rally. 

First, BTC needs to close above the triangle’s upper trendline at approximately $37,300 today. A reliable outcome considering there are only a couple of hours of trading left for today. Second, it needs to register a weekly close above an explicit and intimidating price range. The range is defined by the 38.2% retracement level of the rally from the March 2020 low at $41,581, the January high at $41,986, the 200-day simple moving average (SMA) at $42,371, the February low at $43,016 and finally, the 38.2% retracement of the April-May correction at $43,331. 

Third, it needs to overcome the 50-day SMA at $44,784 and then resist the selling pressure that will follow when Bitcoin price triggers a death cross on the daily chart in the next few days. A death cross occurs when a faster-moving average (50-day SMA) crosses below the slower moving average (200-day SMA).

For Bitcoin investors and followers, it is obviously motivating to hear positive remarks from Elon Musk. Still, the tweet does not suddenly remove the notable technical obstacles that confront a sustained rally to the all-time high of $64,899.

Price is more than the words of one individual. It is a collective interpretation of the investment opportunity, which in the case of Bitcoin price has been challenged and remains significantly challenged, as the charts insist.

Bitcoin price looks ready to bounce

In the following video, FXStreet’s analysts evaluate where Bitcoin price could be heading next as BTC gets ready to rebound.

 

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