Bitcoin Retains Short-Term Bull Bias Despite Exchange Hack

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Bitcoin (BTC) suffered a minor dip last night after it was revealed that hackers had again breached a major cryptocurrency exchange, but the charts still favor a corrective rally to $7,000.

The cryptocurrency fell from $6,740 to $6,560 after Bithumb – the sixth largest cryptocurrency exchange in the world by trading volume – confirmed that the attack had happened between late Tuesday night and early Wednesday morning local time, adding that about $32 million-worth of cryptocurrencies had been stolen.

The Seoul-based cryptocurrency exchange has now halted all deposit and withdrawal service in order to ensure security and announced that it would fully compensate customers.

While the hack highlights the security risks that have plagued the cryptocurrency space and has potential to dent investor sentiment, bitcoin is so far refusing to embrace the negative narrative.

At press time, the cryptocurrency is changing hands at $6,630 on Bitfinex – down just 1 percent in the last 24 hours and holding well above the Asian session low of $6,560.

BTC’s resilience has ensured the technical charts are retaining short-term bullish bias, and is trading above the support of the 50-candle moving average (MA) on the 4-hour chart, currently at $6,545.

4-hour chart

The chart shows a rounding bottom – a bullish reversal pattern – meaning sentiment has gradually shifted from bearish to bullish over the last 10 days. The relative strength index (RSI) is also holding above 50.00 (in bullish territory).

BTC also recently witnessed a bullish Bollinger Band breakout, as discussed yesterday.

So, the short-term outlook remains positive and only a break below the ascending trendline (dotted yellow line) would weaken the bull case.

Daily chart

As seen above, the bullish crossover between the 5-day and 10-day MA further indicates a short-term bearish-to-bullish trend change.

View
BTC remains on the hunt for $7,024 (23.6 percent Fibonacci retracement of the drop from $9,990 to $6,108).
A daily close (as per UTC) above that level would open the doors to $7,500–$7,600, although the rally could be short-lived as the long-run technicals are still biased to the bears.
A break below $6,510 (rising trendline support, as seen in the 4-hour chart) would abort the short-term bullish view.
A daily close below $6,000 would likely revive the bear market and could yield a drop toward $5,000.

BTC image via Shutterstock

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