Bitcoin has been on a parabolic surge since the start of December 2021. The flagship crypto recently reached the trillion-dollar market cap milestone faster than many traditional firms and tech companies like Amazon, Google, and Microsoft. After surpassing the $57,000 level on February 20, 2021, analysts believe that the BTC price needs to hold above $50,000 for the rally to continue above $60K.
In the past few weeks, the bitcoin bulls have been on the front foot buying every drop that has resulted in new all-time highs almost daily. The crypto has peaked around $57,500 for now, and experts believe that it has more room for a rally past $60,000.
This week has seen lots of bullish news, including the first German-listed firm allocating part of its cash reserves to bitcoin. Also, there was the launch of the first Bitcoin ETF in Canada which traded more than $220 million in its debut.
Just for a day
— Elon Musk (@elonmusk) February 19, 2021
Such positive and adoption news appears to be feeding the bitcoin fire. To cap it all, Elon Musk has embraced the latest ‘laser eye’ meme to the joy of most hodlers who believe that bitcoin will hit $100K before the end of the year.
Nevertheless, the next major point of interest has formed around $63,000. This price level may be reached relatively soon in case bitcoin can hold above several critical support levels.
Bitcoin Continues Its Rally By Defending Crucial Support Levels
The 4-hour chart for bitcoin indicates that there is a clear upside path since it broke out of the construction range that had formed between $30,000 and $42,000. Since that price action, critical levels at $44K and $50K have held as support. They served as strong launchpads for the current highs above $56,000.
This bullish run is also getting some power from the decreasing reserves on the exchanges. The outflow is similar to what happened at the end of 2016 when the BTC price surged towards $20K. More coins were withdrawn from exchanges than deposited.
These massive withdrawals mean that people are eager and ready to hold their bitcoin for the long term, which translates to strong demand and low time preference. In the recent rally, the first Fibonacci level at 1.618 was reached. Currently, bitcoin appears to be nearing the second point of interest, which is the 2.618 Fibonacci level located around $63,000.
If bitcoin drops, the strongest support has formed at $50,000, and it is a critical level on the four-hour chart. If $50K does not break in case of a pullback, there is a high likelihood that the BTC price will reach $63,000 in the mid-term. But, if this support breaks, the crypto may plunge towards $43,000.
Total Crypto Market Cap Surpasses $1.7 Trillion
In the meantime, the cumulative crypto market capitalization is creeping towards $2 trillion during this bull cycle as the altcoins follow bitcoin’s lead. These are levels that many people could not have expected to reach just a year ago.
But after breaking the all-time high set in 2017, the next level of interest was $1.2 trillion, which also doubles up as the 1.618 Fibonacci area. That zone was speedily broken as bitcoin marched upwards. Currently, the total market cap is targeting $1.85 trillion, the 2.618 Fibonacci level.
Market charts also indicate that there is a massive gap between the 21-Week MA and the current price. Thus, it means that the current rally is now becoming overextended. Historically the last week of February and March have not been bullish for the crypto market. Hence, a correction should not catch investors by surprise. A retest of the $1.2-trillion zone cannot be ruled out.
Critical Levels To Watch For Bitcoin Price
It is always about holding crucial support zones in trading for upside or downside momentum to continue. In this scenario, the first critical levels are located between $43,000 and 44,000, and the next one is at $50,000.
But the same can also be said about the $55K level on the lower timeframes, mostly the 1-hour candle chart. If the bulls lose that key level, there is some gap to the next region of support, meaning that a breakdown to the $50K level can happen.
Nevertheless, provided that $55,000 remains strong, there is not much that can limit or hold back BTC from going for the next Fibonacci level at $63,000.