With bitcoin (BTC) showing resilience to negative news flow, a strong bullish move is looking increasingly likely.
The Chicago Board Options Exchange’s (CBOE) BZX equity exchange on Wednesday withdrew its request for a rule change by the United States Securities and Exchange Commission (SEC) that would have allowed it to list a bitcoin (BTC) exchange-traded fund (ETF) backed by VanEck and SolidX.
The market narrative with respect to the ETF is that its approval could trigger the next bull run in the leading cryptocurrency by market value. Moreover, in the past, markets have responded negatively to delays or rejections in ETF approval.
The latest ETF withdrawal, however, has barely moved a needle on BTC. The cryptocurrency continues to trade in a sideways manner above the crucial support at $3,500.
The lackluster response to the bearish news could be considered a sign of sellers’ exhaustion – more so, as the primary trend is still bearish. As a result, the cryptocurrency could soon end the 14-day-long consolidation with a bullish breakout.
Further, the ETF under consideration – first filed with the SEC in June 2018 – had experienced several delays in the past. Put simply, the bar of expectations was set low. Hence, the latest ETF withdrawal has not had a bearish impact on price, leaving the doors open for a strong upside move.
As of writing, BTC is changing hands at $3,540 on Bitstamp, representing a 0.70 percent drop on a 24-hour basis.
On the daily chart, BTC has created a descending triangle, which comprises a horizontal line connecting strong support level and a falling trendline representing lower highs.
A UTC close above the upper edge of the triangle, currently at $3,630, would confirm the breakout and could yield a rally to the psychological resistance of $4,000.
The bull breakout looks likely as the ETF news has failed to embolden the bears and gold is feeling the pull of gravity (BTC and gold are inversely related).
- BTC’s defense of $3,500 amid bearish news flow likely indicates sellers’ exhaustion. As a result, the prospects of cryptocurrency witnessing a triangle breakout on the daily chart are high. A bull breakout, if confirmed, would expose the resistance lined up at $4,000.
- Triangle breakdown – close below $3,470 – would validate the bearish setup on the weekly chart and hasten the drop to the December low of $3,122.
Disclosure: The author holds no cryptocurrency at the time of writing.