The price of BTC set another all-time high when Bitcoin rose to $ 40,394 yesterday, an increase of 11%, after which it almost immediately fell to $ 35K. What will happen next with the world’s most dominant cryptocurrency: will the price of BTC rise, strengthen or fall?
Bitcoin Price Rally
In 2020, Bitcoin proved itself not so much as a currency, but as a protection against macroeconomic uncertainty. In contrast to the bullish growth of the retail cryptocurrency in 2017, financial analysts and experts believe that the bullish growth of Bitcoin is largely due to the growth of investment by reputable institutions such as Microstrategy, Paypal and MassMutual, which now view BTC as a safe asset to hedge against rising inflation.
Gavin Smith, CEO of Panxora, said in a note:
“No wonder the world is watching Bitcoin today. Its price is skyrocketing as the effects of COVID’s monetary stimulus continue to raise concerns about inflation. As a result of quantitative easing, market participants are switching to BTC to protect against instability. But while further growth is inevitable, investors should not expect it to move in a straight line.”
Paolo Ardoino, CTO of Bitfinex, spoke about the growing utility of Bitcoin as a means of protecting against inflation:
“Bitcoin is growing amidst a perfect financial storm. Against this background, global macroeconomic uncertainty persists, which can devalue fiat currencies. The adoption of the digital gold narrative by the high-finance sector could potentially be followed by retail, as the market capitalization of all cryptocurrencies reaches $ 1 trillion for the first time.”
Just four months ago, in early September, the price of BTC was about $ 10K, and the psychological threshold of 20K was overcome only in mid-December. As soon as the Cue ball broke 20 thousand dollars, the cryptocurrency was already unstoppable. BTC soared to $ 28,000 over the New Year’s Weekend, rising above $ 30K on January 2. In less than a month, BTC has doubled in value and is up more than 700% from a low of $ 4,000 in March last year.
The PTC continues to attract a lot of public and institutional attention as it surpassed $ 40,000 for the first time in its history, bringing the total value of the entire cryptocurrency market to more than $ 1 trillion. The price of the crypto king also fluctuated by more than 17% yesterday, and Smith added that new investors should be careful when entering the volatile crypto market, despite the current bullish growth of Bitcoin. He said:
“The reality is that Bitcoin is far from a magic money tree, and it is not free from downward price fluctuations. In fact, we can sometimes expect sharp declines of up to 25%, when investors periodically withdraw profits. Although they are right, be optimistic about additional growth, and proceed cautiously.”
Bitcoin Price Analysis
The price of BTC reached $ 40,000, and the total market capitalization of the cryptocurrency exceeded 1 trillion. As we can see on the daily chart, the MACD and RSI have entered an extremely overbought area. It is possible that the price will consolidate around 33,000-40,000 or even fall sharply to resume the uptrend.
There are two possible scenarios for the market that we can see as outlined above: one is a price consolidation near this level, or perhaps a sudden pullback to 15-25%.
We can see $ 33,279 (0.382 Fibonacci retracement level), or $ 31,244 (0.5 Fibonacci retracement level) can provide reliable support for Bitcoin in the coming days in the event of a price collapse, and this could be a good entry for BTC. At the time of writing, Bitcoin is trading at $ 38,500 with a market capitalization above $ 700 billion.