Bitcoin tags new highs for 2022

A rebound in U.S stock markets has supported Bitcoin's renaissance. As noted in this article here, Bitcoin has become a high-octane version of the Nasdaq. The link between Bitcoin and the Nasdaq link is cryptocurrencies provide access to digital technology, and some high-profile stocks on the Nasdaq hold Bitcoin on their balance sheet.

This means that when the Nasdaq rallies, generally so does Bitcoin and vice versa. As can be viewed on the chart below, both the Nasdaq and Bitcoin fell sharply from their bull market November highs. The move lower was led by Bitcoin, which peaked two weeks earlier than the Nasdaq. It can also be observed Bitcoin bottomed this year, almost two months earlier than the Nasdaq.

The second factor that has supported the rally in Bitcoin this week were comments by Pavel Zavalny, head of the Russian State Duma Committee on Energy, who said Russia could accept Bitcoin as payment for the country's oil and gas resources.

The remarks were made at the end of a news conference where Zavalny explained countries friendly to Russia could pay for Russian energy imports in Rubles, Yuan and Turkish Lira and added, "You can also trade bitcoins."

Where to from here for Bitcoin?

What we can conclude from the chart above is that the direction of equities from here will continue to be important for Bitcoin. And that while U.S. stocks continue to climb a wall of worry that includes hawkish central banks, covid disruptions, supply issues and the war in Ukraine, Bitcoin can follow.

However, before that can happen, Bitcoin needs to see a sustained break above the 200-day moving average, currently at $48,300, which would allow the rally to extend towards the next upside target, $51,000/52,000 area.

An area that consists of the 50% Fibonacci retracement of the decline from the $69,000 November high to the $32,950 January low, as well as the $52,000 high of December 2022.

Source Tradingview. The figures stated are as of Mar 29, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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