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Bitcoin to test 8,000 USD by August

The last week has been good for bitcoin. From the 16th to 22nd of July, the value of BTCUSD rose by 16.6% to hit 7,406 USD on the Bitmex exchange. Last week’s high point was 7,715 USD. There was a high level of market activity observed on the 16th and 17th of July.

On the 16th of July, bulls broke the horizontal resistance at 6,400 USD, pushing on through to 6,750 USD (consolidation zone from 8-9th July). After a 24-hour flat, they successfully broke the resistance at 6,850 USD (formed from the highs from the 4th, 8th, and 9th of July). In one swift movement, BTC prices jumped to 7,470 USD.

The main reason for this short squeeze may have been the cashing out on short positions on the Bitmex exchange, which in turn triggered a chain reaction of protective stop levels while pushing the price up past the psychological 7,000 USD barrier. Trading volume at 17:00 UTC was 802m USD, including 496m USD in market orders.

Buyers came into play after the breakout of this technical level, believing they could induce another rally on the back of all the positive crypto-market news that had come out earlier.

On Friday the 20th of July, during the US session, tried to rekindle the rally, but were met with resistance at 7,715 USD. They stopped at a wall of limit orders and were unable to push higher. From here, BTC shed 6.5% to trade at 7,209 USD.

The only bit of news that might have increased speculative activity during the evening was the launch of Coinbase Prime; a service for institutional investors. News of this came out on the 19th of July, so it’s impossible to be certain that this was the trigger for bitcoin’s rise against the dollar.

Bitcoin this week

At the time of writing this review, BTC futures on the Bitmex exchange are trading at 7,726 USD. The BTCUSD pair has been trading within a range of 7,209 – 7,778 USD for nearly 48 hours. Whichever direction in which the price exits this range should determine its movement for at least the next couple of days. Given the manipulation that takes place on exchanges, the price could trigger the stops on both sides of the range after the breakout before returning to 7,500 USD.

Following its drop from 7,715 USD to 7,209 USD, bitcoin has recovered by 50%. It stopped at the resistance formed from the lows of 7,230 USD and 7,349 USD. We at Alpari believe that this growth phase will last until the 1st of August, after which we will enter a decline until the 23rd of August. It’s highly likely that 8,000 USD will be tested before the 1st of August.

The market should set a trading range of 5,743 – 8,000 USD to prepare buyers for a rally by the end of September. This is a rough timeframe, and things could change depending on pricing models.


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