Bitcoin is gaining traction on its bounce off the bottom of the descending channel on the 1-hour time frame. Price has just passed the mid-channel area of interest and the first Fib, which suggests that a larger rally may be underway.
From here, bitcoin could test the 50% Fib that lines up with the 200 SMA dynamic inflection point. A move beyond this could hit a roadblock at the 61.8% Fib at $3,626 or the top of the channel around $3,650-3,700. If any of these levels keep gains in check, price could head back to the swing low at $3,414 or lower.
The 100 SMA is still below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the downtrend is more likely to resume than to reverse. Then again, price has climbed above the 100 SMA and the gap between the indicators appears to be narrowing, so a bullish crossover might be in order.
In that case, price might be able to gain more momentum to break past the channel top to signal that a reversal is due. Stochastic has some room to climb but is hovering close to the overbought zone to reflect exhaustion among buyers. RSI is already dipping into the overbought territory and might be due to turn lower to indicate a return in bearish momentum.
Bitcoin might be drawing some support from reports that Fidelity will be ready to launch its institutional platform by March. This could usher in the highly-anticipated surge in institutional volumes, which is widely expected to spur a big rebound in prices.
Fidelity works with more than 13,000 financial institutions and its plans to offer a bitcoin custody service revealed a few months back spurred a big bounce in price. However, traders appear to be holding out for actual evidence that volumes are picking up before sustaining any big gains.