Bitcoin (BTC), the cryptocurrency that started it all, has rallied to an intraday high of $10,487 this year. After a sudden rejection at the $10,500 level, many can't help but wonder whether or not this 50 percent rally is already overextended.
Still, Hedgeye Risk Management CEO Keith McCullough is certain that bulls are behind the wheel.
Bitcoin's current risk range
McCullough states that the leading cryptocurrency remains in a daily risk range of $8,998-$10,264. Hence, even if BTC were to drop to as low as $9,000, this could be an attractive opportunity to buy the dip.
Risk ranges are defined based on the company's proprietory model that incorporates price, volatility, and trading volume. They are meant to give traders a hint about when they should buy or sell a given asset. Given how volatile Bitcoin is, it's natural for immediate-term ranges to change dramatically based on what the market is actually doing.
A bullish daily candle
On Feb. 10, Bitcoin dropped four percent and printed an ugly-looking red candle on its daily chart that called the bull narrative into doubt. However, this was followed by a sudden reversal to new yearly highs.
As a result, BTC ended up printing a bullish engulfing candle on Feb. 11, which means that the cryptocurrency is in a clear uptrend.
At press time, BTC is gearing up to test $10,500 again, currently sitting at $10,430 on the Gemini exchange.