Bitcoin extends gains as short-covering after major breakout increased the bullish momentum. What's next?

<p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">FUNDAMENTAL OVERVIEW</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;"> </p><p class="MsoNormal" style="font-family: Aptos, sans-serif; margin: 7px 0; line-height: normal; font-size: 15px;">Bitcoin surged on Friday after a <a href="https://crypto.news/cftc-submits-crypto-market-framework-for-white-house-review/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">CFTC crypto rulemaking submission on Thursday became public</a>.The filings were submitted for regulatory review after the CLARITY Act failed to advance in the Senate earlier in the week. The CFTC has effectively signalled that it intends to move forward with a crypto market framework using its existing authority rather than waiting for Congress. </p><p class="MsoNormal" style="font-family: Aptos, sans-serif; margin: 7px 0; line-height: normal; font-size: 15px;">Yesterday, we saw the momentum in bitcoin picking up further after the cryptocurrency broke out of its month-long range. That might have been caused by short-covering after such a major breakout. Finally, Strategy resumed Bitcoin purchases, buying another 950 BTC for approximately $75.7 million. That's not large, but it’s symbolically important because Strategy had paused purchases for several weeks.</p><p class="MsoNormal" style="font-family: Aptos, sans-serif; margin: 7px 0; line-height: normal; font-size: 15px;">On the macro side, the less hawkish than expected Fed dot plot gave the crypto market the green light for a rebound, and the gains then extended due to idiosyncratic catalysts, the fall in oil prices, Middle East de-escalation hopes and a broad positive risk sentiment.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">The market’s focus is now on the UN General Assembly, as Trump called a meeting with Gulf leaders on the sidelines to discuss the next steps in the war with Iran. The Iranian delegation was also allowed to participate in the Assembly, so there will likely be a meeting between Trump and Iranian President Pezeshkian. Keep in mind that a de-escalation would send oil prices lower, further easing inflation and rate hike concerns and ultimately support risk sentiment and Bitcoin.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">Economic data will also be important given the current market’s pricing. When positioning and market expectations become stretched, even a modest shift in the data can trigger a significant reversal. If US data starts surprising to the downside, expectations for aggressive rate hikes will likely be reduced, potentially giving Bitcoin an additional boost.</p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: normal; font-size: 15px;"> </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME</p><p></p><p>On the daily chart, we can see that <a href="https://www.tradingview.com/symbols/BITCOIN/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Bitcoin</a>broke out of the month-long range and opened the door for a rally into the 98,000 level next. We now have a new major upward trendline that could act as support. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to keep targeting new highs. The sellers, on the other hand, will look for a break lower to extend the drop into the 76,000 support.</p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME</p><p></p><p>On the 4 hour chart, we have an upward trendline defining the bullish momentum on this timeframe. If we get a pullback, we can expect the buyers to lean on the trendline with a defined risk below the 82,500 support to keep pushing into new highs. The sellers, on the other hand, will want to see the price falling back below the 82,500 support to extend the drop into the major trendline. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME</p><p></p><p class="MsoNormal" style="font-family: Aptos, sans-serif; margin: 7px 0; line-height: normal; font-size: 15px;">On the 1 hour chart, there’s not much we can add here but from a risk management perspective, the buyers will have a better risk to reward setup around the trendline and the 82,500 support to position for further upside, while the sellers will need a break below the support to extend the correction into the daily trendline. The red lines define the <a href="https://investinglive.com/Education/trading-tip-know-the-average-daily-range-adr-20220207/" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">average daily range</a> for today. </p><p class="MsoNormal" style="margin: 0 0 11px; line-height: 106%; font-family: Aptos, sans-serif; font-size: 15px;">UPCOMING CATALYSTS</p><p class="MsoNormal" style="margin: 0 0 11px; font-family: Aptos, sans-serif; line-height: 103%; font-size: 15px;"><a href="https://investinglive.com/EconomicCalendar" rel="follow" style="color: rgba(70, 120, 134, 1); text-decoration: underline;">Today</a>, we have Trump meeting with Gulf leaders and potentially with Iran’s President at the UN General Assembly. Tomorrow, we get the Flash US PMIs. On Thursday, we have the Trump-Xi meeting.</p> This article was written by Giuseppe Dellamotta at investinglive.com.