Bitcoin price rises amid cautious optimism about a tentative deal to lift the US debt limit.
Bitcoin posted modest gains at the start of the March 29 trading session as traders looked for stability above $28,000, a psychological support and resistance level.
On May 29, the price of BTC changed hands at $28,450, a two-week high. However, the short-term profit-taking sentiment among day traders pushed the price down to $27,850 by the end of the day.
However, BTC is still up about 10% from its recent market low below $26,000 on May 25.
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Bitcoin’s latest gains come amid optimism about the United States averting default after a debt deal is expected by the end of the week.
President Joe Biden and Speaker of the House Kevin McCarthy confirmed that they have reached an agreement to raise the US borrowing limit. The assertion comes a week after Finance Minister Janet Yellen warned that failure to increase the limit could leave the government cashless by June 1.
The news has left the US dollar, which has appreciated during the debt deal stalemate thanks to its “safe-haven” status, into a weak spot. Notably, the US dollar index (DXY) was down 0.25% in early Monday morning trading but recovered its losses thereafter.
Bitcoin typically trades against the DXY — this long-term negative correlation may have driven its price higher as the greenback fell against a basket of top foreign currencies.
However, a decisive debt deal is seen as a long-term bearish bias for Bitcoin due to fears that it will remove approximately $1 trillion worth of liquidity from the market.
BITCOIN TECHNICAL ANALYSIS
From a technical perspective, Bitcoin looks poised for a short-term correction towards $25,000.
Notably, BTC price has been consolidating inside a descending triangle range since March 23. On May 29, it tested the upper trendline of the range as resistance and turned down. This retracement can last until the price hits the lower trendline near $26,500.
However, since the ascending triangle occurs after a strong market uptrend, the overall trend of Bitcoin appears to be tilted to the upside, according to the rules of technical analysis. Therefore, if the price breaks through the upper trendline, it can rise to the maximum height of the triangle.
That puts Bitcoin on its way to a possible rally to $31,000 in June, up 10% from current prices.