Bitcoin Has Surged From Virus Lows - Is It a Buy?

Bitcoin prices have been surging from the coronavirus lows and it's now at multiyear highs. Can bitcoin continue higher?
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Cryptocurrencies have been a volatile space for investors over the year. Lately, though, that volatility is resulting in a powerful move to the upside.

As bitcoin and others become more accessible from various platforms, the asset is gaining momentum.

Like stocks, gold and other asset classes, bitcoin was volatile when the coronavirus came along. It did not act like an uncorrelated asset that could help investors diversify.

Instead, bitcoin fell from a high of roughly $10,500 in February to a low near $3,850. The nearly two-thirds (63%) decline was almost twice what the S&P 500 saw.

But once the Federal Reserve made its intentions clear, bitcoin became an interesting speculation. That’s particularly as the famed Wall Street trader Paul Tudor Jones began talking up bitcoin as the “fastest horse” in the inflation trade.

Now, bitcoin is hitting its highest level in years and more and more investors are looking at it as something to own. Can it make new all-time highs?

Trading Bitcoin

Daily chart of bitcoin.

Daily chart of bitcoin.

Helping fuel bitcoin are companies like PayPal  (PYPL) - Get Report and Square  (SQ) - Get Report making it more accessible, respected investors like Jones getting behind it, and companies like MicroStrategy  (MSTR) - Get Report being outright buyers of bitcoin.

By including most of 2020 on the chart above, it makes for a very wide trading range. The lows stretch all the way down to $3,850, while the recent high is just shy of $16,000.

Because of that wide range, it can be hard to see the recent wedge action.

In mid-October, bitcoin burst through the August high near $12,500. From there, prices refused to break down, as the 10-day moving average continued to act as support.

The 10-day moving average is now helping to wedge bitcoin prices, as short-term downtrend resistance creates a series of lower highs. 

Many will interpret this as a bullish consolidation, and until bitcoin begins to break below support, that’s exactly the interpretation they should make.

Below the 10-day moving average and $14,610 will raise some questions. If, however, bitcoin remains above these marks, the bulls will remain in control.

What the bulls are looking for is a rotation through last week’s high near $15,969. 

Above that and the two-times range extension is in play at $17,151, followed by the 2017 all-time high between $19,666 and $19,891, depending on which data one is using.

Regardless, bulls will be looking for $20,000 or higher should bitcoin get through $17,150.