Bitcoin price rallied amid cautious optimism over a tentative deal to lift the U.S. debt limit.
MARKET UPDATE
markets posted modest gains at the beginning of the March 29 trading session as traders sought stability above $28,000, a psychological support andresistance level.
At the time of writin BTC’s price changed hands for over $28,450, its highest level in two weeks. However, short-term profit-taking sentiment among day traders pushed the price lower toward $27,850 later in the day.
Still, BTC was up about 10% compared to its recent market low below $26,000 on May 25.
The U.S. comes closer to averting a default
The latest Bitcoin gains appeared amid cautious optimism about the U.S. averting a default after the weekend’s tentative debt deal.
President Joe Biden and House Speaker Kevin McCarthy confirmed that they reached an agreement to raise the U.S.’s borrowing limits. The affirmation came a week after Treasury Secretary Janet Yellen’s warning that the failure to raise the limit could leave the government without cash by June 1.
The news left the U.S. dollar, which has risen during the debt deal impasse thanks to its “safe haven” status, in a weak spot. Notably, the U.S. dollar index (DXY) dropped by 0.25% in early morning trade but recovered the losses later.
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Bitcoin typically trades inversely to DXY — this long-term negative correlation may have prompted its price higher as the greenback fell against a basket of top foreign currencies.
However, a decisive debt deal is considered long-term bearish for Bitcoin on fears that it would remove about $1 trillion worth of liquidity from the market, as Cointelegraph covered here.
Bitcoin technical analysis
From a technical perspective, Bitcoin looks ready for a short term correction toward $25,000.
Related: Mining difficulty passes 50 trillion — 5 things to know in Bitcoin this week
Notably, the BTC price has consolidated inside a descending triangle range since March 23. On May 29, it tested the range’s upper trendline as resistance and dropped. This pullback can extend until the price hits the lower trendline near $26,500.
But, since the ascending triangle appears after a strong market uptrend, Bitcoin’s overall bias looks skewed to the upside, per the rule of technical analysis. Therefore, should the price break above the upper trendline, it could grow by as much as the triangle’s maximum height.
That puts Bitcoin en route to a possible rally to $31,000 in June, up 10% from current price level.