Bitcoin (BTCUSD) Has Rallied to Approach Its All-Time High

Bitcoin (BTCUSD) has rallied over the past week to approach the record high it set last month, tracking the strong performance of U.S. equities and encouraging signals about the U.S. economy.

Bitcoin (BTCUSD) has rallied over the past week to approach the record high it set last month, tracking the strong performance of U.S. equities and encouraging signals about the U.S. economy.

The legacy cryptocurrency moved as high as $110,400 Wednesday morning after a closely watched inflation report showed that consumer prices rose less than expected last month, good news for investors who are hoping the Federal Reserve could be in a position to cut its benchmark interest rate this year. The price of bitcoin dropped to $108,800 recently, as U.S. stocks backed off their earlier highs as well.

Once a fringe financial asset dismissed by the mainstream, cryptocurrencies have gained new legitimacy this year thanks in part to the support of President Donald Trump and several allies in Congress. The price of bitcoin has also been supported by surging demand from publicly traded companies, such as Strategy (MSTR), that use proceeds from equity sales to purchase bitcoin for corporate treasuries.

Meanwhile, total assets in bitcoin exchange traded funds have ballooned to $132 billion this month, up from $91 billion in early April, pointing to growing institutional interest in the cryptocurrency.

Bitcoin last hit a record high, of just under $112,000, on May 22. The digital currency has gained about 16% since the start of the year, far outpacing the performance of major stock indexes.

Below, we take a closer look at Bitcoin’s chart and apply technical analysis to identify key price levels worth watching out for.

Flag Pattern Breakout

After hitting its all-time high last month, bitcoin’s price consolidated within a flag, a chart pattern that indicates a continuation of the cryptocurrency's uptrend that started in early April.

Indeed, the digital asset staged a decisive breakout above the pattern earlier this week, laying the groundwork for a new move higher.