Bitcoin | Page 8 | The Gold Forecast

Taproot catalyzes BTC’s pivot from bear to bull market

Tuesday, June 15, 2021 - 16:25 by Joseph M. Wagner II

Bitcoin futures are trading unchanged to fractionally higher on the day at $40,250. It was exactly one week ago today when BTC traded off the bottom of its range at roughly $30,000, which is the .618% Fibonacci retracement ($30,790). Although it touched that crucial support intraday last Tuesday, June 8, it managed to close above the other key support level at roughly $33,430, the current fix of the 200-day moving average.

This last week has seen bitcoin rise by over 26% and is right up against minor resistance at $40,000. If it manages to break through this level and close above it solidly, then we would have to contend with the 38.2% retracement and major resistance level at $44,000. One of the key developments that are helping BTC ascend in price was the locking in an upgrade to Bitcoin’s protocol called taproot. According to taprootactivation.com, “Taproot is a proposed Bitcoin protocol upgrade that can be deployed as a forward-compatible soft fork… a new scripting language called Tapscript, Taproot will expand Bitcoin’s smart contract flexibility, while offering more privacy by letting users mask complex smart contracts as a regular bitcoin transaction.”

This long-awaited upgrade will be implemented on November 4 and was approved by 90% of the total hash rate, basically 90% of active miners/mining pools. This landmark improvement protocol will benefit users, holders, developers, miners of Bitcoin in three distinct ways. The first being a reduction of data size used in complex transactions, making them cost less to execute. This, in effect, makes simple signature wallets and more complex ones appear the same, which leads to the second benefit, increased privacy. By implementing Schnorr signatures, it will essentially make multi-signature transactions unreadable or indistinguishable from normal ones giving users another layer of anonymity. The final and most promising change is implementing Tapscript. This will allow for smart contracts to run on Bitcoin’s blockchain. It will give rise to many new functions and applications that will essentially give developers the ability to create and birth decentralized finance applications (dapps) like those on the Ethereum network.

For the last month, BTC has been confined between the 100-day moving average as a ceiling and the 200-day moving average as a floor. Although the path of these two moving averages is parallel, and the gap is sizable and blissfully postured with the longer-term moving average on the bottom, the moving averages are signaling a bearish market. What I am speaking to is the death cross between the 50- and 100-day moving averages that came into the charts today.

Even with this death cross coming in, the recent activity over the last week actually alludes to the likely possibility that we have made a pivot, and the market is once again in rally mode. Our technical studies indicate that over the next week, prices will likely rise, but the upside potential is capped by so many areas of resistance. So, while we don’t foresee huge gains, we believe that pricing will be higher than $40,000 by next week, and we could see the $35,000 area becoming a new area of support.

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