Bitcoin is teasing a minor rally today, having defended key support at $6,230 despite a string of bad news.
At press time, the leading cryptocurrency is changing hands at $6,400 on Bitfinex – down 3 percent on a 24-hour basis. Meanwhile, 94 out of the top 100 cryptocurrencies by market capitalization are flashing red, according to CoinMarketCap.
The risk-off tone in the cryptocurrency markets is likely associated with the US Securities Exchange Commission's (SEC) rejection of several proposals for bitcoin exchange-traded funds (ETFs) on Wednesday.
Further, it was reported earlier today that China, one of the biggest sources of demand for cryptocurrencies, is planning to block access to more than 100 overseas crypto exchanges.
Still, BTC has avoided a break below the rising trendline and is holding well above the support at $6,230 (Aug. 20 low), as seen in the chart below, forcing us to consider the possibility of a rally.
The chart also shows the 50-candle and 100-candle moving averages (MAs) are beginning to rise in favor of the bulls. So, it seems safe to say that the path of least resistance is to the upside. Only a UTC close below $6,230 would weaken the bull case.
That said, the probability of a break below $6,230 is low, as the SEC ruling has not caught the market off guard – that is, the investor community was likely expecting the commission to deliver bad news after its previous ETF rejection in July.
Following that, the bitcoin price crashed more than 30 percent in the three weeks to Aug. 14, indicating the market was pricing in yesterday's negative news in advance.
- BTC could remain well bid above $6,230 (Aug. 20 low) in the next 24 hours. That would pave the way for a sustained rise towards $7,000 in the short-term.
- If the support at $6,230 is breached, then the bears may push the cryptocurrency down to the recent low of $5,859.
- A UTC close below $5,755 (June low) would signal a resumption of the long-run bear market and would open the doors to $5,000 (psychological support).
Disclosure: The author holds no cryptocurrency assets at the time of writing.