Bitcoin’s (BTC) price broke through the crucial level at $40,500 as news of Tesla adding $1.5 billion in Bitcoin to their balance sheet. This news event pushed the price to new all-time highs, putting the next major resistance level at $50,000.
What’s more, other cryptocurrencies are accelerating left and right as the landscape is ideal for altcoins to start moving. All-time highs are being established daily across many altcoins while Bitcoin is consolidating. But how long will this consolidation last? Let’s take a look at the charts.
Bitcoin price breaks key resistance on Tesla news
XBT/USD 4-hour chart. Source: TradingView
The 4-hour chart shows an apparent breakthrough of the $40,500, which was crucial for more upside as the Tesla news resulted in the biggest daily green candle ever for Bitcoin.
As the chart shows, the next level of interest is the psychological barrier around $50,000. It’s also the next major Fibonacci level. The 1.618 Fibonacci level is often used as a crucial indicator to predict levels in price discovery.
BTC/USD 4-hour chart. Source: TradingView
Another important level to watch for Bitcoin is the order block around the $43,300-43,700 area. Continuation to the upside is likely as long as that area holds.
However, a sharp drop is likely to happen if Bitcoin’s price can’t hold this level. Falling through the $43,300-43,700 area would generate a cascade of stop/loss triggers as the price of Bitcoin drops back in the range it acted in for several weeks. The next level of support can be found between $37,800-38,500 if $43,300 fails to hold.
A weakening dollar is fueling the crypto market
U.S. Dollar Currency Index (DXY) 1-day chart. Source: TradingView
The Dollar Strength Index (DXY) shows weakness after a temporary bottom at 90 points. This bottom formation was marked by a bullish divergence, resulting in a small relief rally. This rally ended at the 91.60 points level and made a U-turn.
The primary question for the DXY now would be whether the 90 points level can hold. If that is the case, then the bullish divergence is still valid and a renewed test of 92 could occur. Such a rebound would likely lead to a pullback for the crypto market.
However, if the DXY index continues its downtrend, then there won’t be much to stop the cryptocurrency market from making higher highs and BTC hitting $50,000.
Total crypto market cap eyes $1.5 trillion
Total crypto market cap 1-week chart. Source: TradingView
The total market capitalization of crypto shows strength as it broke through the previous high. Only a minor retest of $730 billion occurred, which was followed by a nearly vertical move.
The Fibonacci extension tool now shows that the new point of interest is now at $1.5 trillion, as the chart shows.
The question is whether the market is ready to continue from here to the next potential point of interest at $2.1 trillion. If the market corrects, which may happen if Bitcoin loses the $43,300-43,700 level, then traders should watch the $1.05 trillion level for a potential bounce.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.