A bullish rumor doing the rounds was that the Chinese ban on bitcoin trading is likely to be lifted. That news boosted Bitcoin’s price higher yesterday. However, a parting message by Huobi poured cold water on the expectations. As a result, Bitcoin prices are correcting from their highs.
While Warren Buffett, Jamie Dimon, and a few others are warning of a bubble in Bitcoin, the legendary investor Bill Miller is smiling away to the bank. His fund is up 70% this year. Miller had invested about 30% of his fund’s assets in Bitcoin in early-2016.
Elsewhere, a few central banks are trying to stifle the use of Bitcoin by banning it. Nevertheless, the beauty of cryptocurrencies is that they are not controlled by anyone. The market shall decide the value. Though the ban might make it difficult to use Bitcoin in the marketplace, it is unlikely to affect trading activity.
BTC/USD
Bitcoin has rebounded sharply from the trendline support and is attempting to breakout of the ascending channel.
On Sunday, the cryptocurrency broke above the resistance line of the ascending channel, but could not sustain it. Though the ascending channel has been a stiff resistance and the RSI is also showing a negative divergence, we believe that if the digital currency again breaks out of the channel, it is likely to gain momentum and rally towards its target objective of $6845. Therefore, we recommend a buy at $6400 with a close stop loss of $6000. However, this is a risky trade, therefore, please use only 30% of the usual allocation.
If the cryptocurrency fails to breakout and sustain above the resistance line of the ascending channel, it can again fall to the trendline support. It will become negative, only if it breaks down of the trendline support and the 20-day exponential moving average, which is at $5623.