Bitcoin is back above $500 for the first time this month, after dropping towards $350 briefly. If you have been waiting to buy, keep a close eye on the $520 level. This is an important price on the technical chart, as it was support during the last two major crashes in December and February. It is also trend line resistance that has been in place for several months.

bitcoin 520Put simply, a breakout above $520 is likely to lead to momentum buying and propel Bitcoin much higher. Failure to break through this resistance level is likely to lead to a resumption of the downtrend that has been in place since December. If you did not have the courage to buy the dip below $400 and still want to exchange some Federal Reserve fiat notes for Bitcoin, it might be best to wait and see what happens as the digital currency approaches the $520 level.

If you took advantage of prices under $400, you are now up over 30% in the past week! I am of the opinion that we are witnessing nothing more than a buying opportunity and that the price of Bitcoin is destined to climb much higher over the next year. It is designed to work outside of centralized government systems, so attempts by China to ban the currency or the IRS to extract maximum tax revenues should have little impact. Enterprising citizens will find ways around these government roadblocks.

I think the sell off was an over-reaction to this news from China and the IRS. As more and more retailers begin accepting Bitcoin and citizens of the world continue to lose trust in governments and their bankster partners, demand for Bitcoin will increase significantly. Increased demand and limited supply always leads to higher prices. It is Economics 101 and this time should be no different.

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