If you were around earlier this hour, you likely noticed the brief panic on Twitter when Bitcoin fell under $7,600; that was the lowest the cryptocurrency had traded at in literal weeks, not to mention it fell under crucial support.
Though, over the past 20 minutes, the cryptocurrency has bounced, rapidly rallying from the low around $7,590 to as high as $7,805 as if investors had their fingers on the buy trigger.
While seemingly irrelevant, as this was just Bitcoin rallying just over 2%, this small bounce was extremely important. Here’s why.
Bitcoin Cleanly Bounces Back Above $7,700: Why It’s Important
If you’ve been following cryptocurrency analysts over the past few weeks, you likely know how much importance they’ve given to the $7,700 price point for Bitcoin.
What’s interesting is that there is more than one reason why $7,700 is so key for BTC:
- First and foremost, $7,700 is the point at which the cost of producing one Bitcoin lies, along with where the average miner cash flow line is. This is important because the average miner cash flow marked the bottom for BTC three times over the past few months, then at the ultimate bottom around $3,150 in December 2018.
Both the $BTC production cost and average miner cash flow arrive at the 7700 level.
This definitely isn’t an important level or anything 😏 pic.twitter.com/5SF0V0LczA
— Byzantine General (@ByzGeneral) March 8, 2020
- On a more technical level, economist Alex Krüger recently said that $7,700 is the technical level at which the Bitcoin bull trend will end. Indeed, this level marked the local top multiple times in the accumulation range at the end of 2020.
The fact that the cryptocurrency has strongly defended $7,700, now for the second or third time over the past few days, shows that there is latent buying support.
Furthermore, if Bitcoin continues to close a daily or weekly candle above this level, it will increase the likelihood there is an eventual resumption of the bull trend, not another crypto winter. Because again, trading is a game of probabilities.
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