Bitcoin Rises as Technicians Probe Whether Rally Is Sustainable

(Bloomberg) -- Bitcoin is ending the third quarter on a high note, staging its first rally in four days, and technicians are scouring the charts to see if it can sustain the nascent advance. 

Bitcoin’s Thursday gain saw it bouncing off its 100-day moving average line and the coin looks to be forming a base around $40,000. Those are two developments that many chartists would consider positives. Its next test is the 50-day line, which currently sits around $46,500. Meanwhile, Federal Reserve Chair Jerome Powell said in a Congressional hearing Thursday that he had “no intention” on banning cryptocurrencies. He did, however, add that stablecoins might be appropriate for regulation.

In addition, the MACD signal -- or the moving average convergence divergence gauge -- looks to have stabilized and is now curling upward, which suggest its recent negative trend is in the process of deteriorating. 

“When you get something that’s been down several days in a row, it doesn’t take much to give it a little bit of a relief rally, and that’s I think what we’re getting,” said Matt Maley, chief market strategist for Miller Tabak + Co.

Thursday saw Bitcoin gain as much as 6.6%, with the coin touching $43,826. Other digital assets also advanced, with the Bloomberg Galaxy Crypto Index adding 7.2% at one point. 

Still, Bitcoin is down about 8% in September, which has historically been a tough month for the digital asset. Over the last decade, September is the only month when Bitcoin has failed to deliver positive returns. The coin fell during the calendar month in six of the previous 10 years, losing more than 6% on average, data compiled by Bloomberg show.

Bitcoin was hit on multiple fronts during the month, including a botched roll-out of the coin as legal tender in El Salvador and tightening of regulatory oversights in the U.S. and China. 

The crackdowns in China and the U.S. “caused a decrease in AUM for digital asset investment products,” said a CryptoCompare report. But “a rise in volumes in September coupled with positive weekly inflows for the first time in 3 months suggests there could be upside going into the last quarter of 2021.”

The digital asset is up 25% for the quarter, compared with a drop of 41% in the prior three months. 

©2021 Bloomberg L.P.