bitcoin roared back this week, making its way to $48,207 – its highest point since early January. This exciting rise follows weeks of muted trading, fueled by concerns about institutional exits and a post-ETF price drop. But what is causing this sudden increase? And can the digital dragon overcome its next obstacle?
Positive winds fill bitcoin's sails
Several factors are driving bitcoin's recent rally:
- Spot ETFs Boost: The long-awaited launch of bitcoin spot ETFs in January could finally be fulfilling its promise. Potential capital inflows and positive sentiment around these new investment vehicles are generating interest.
- Halving Horizon: bitcoin's halving, scheduled for May 2024, looms large. Historically, this event, which reduces the rate of creation of new Bitcoins, has been linked to price increases, fueling investor optimism.
- Market synergy: The S&P 500's recent rise to all-time highs appears to be infecting the cryptocurrency market, creating a wave of positive momentum.
- Moon luck? bitcoin usually sees gains around Chinese New Year, and this year is no exception. The “Year of the Dragon,” with its auspicious connotations, adds another layer of bullish sentiment.
- ETFs Absorbing Selling Pressure: Several ETFs have absorbed more than $1 billion in bitcoin selling pressure in recent weeks, indicating underlying demand despite previous ETF concerns.
bitcoin currently trading at $47,335 on the daily chart: TradingView.com
But can bitcoin slay the dragon of resistance?
While the outlook appears promising, challenges remain:
- Resistance at $48,500: bitcoin faces a crucial resistance level at $48,500. Breaking this barrier is key to reaching a possible new all-time high.
- Post-ETF Sell-Off: Despite the recent surge, bitcoin remains below its pre-ETF highs, raising concerns about a potential sell-off after initial enthusiasm fades.
- Volatility Reigns: Cryptocurrencies remain a notoriously volatile asset, and predicting future price movements is very difficult.
Experts say: bitcoin at $52,000
Sylvia Jablonski, CEO of Defiance ETF, attributes the price appreciation to “recent capital inflows into spot ETFs, the prospect of a halving, and overall market momentum.” However, she cautions that surpassing resistance levels is never guaranteed and that investors should approach any investment with caution.
Meanwhile, Markus Thielen, founder of 10x Research and head of research at Matrixport, predicted a further rise in bitcoin prices using Elliott Wave theory, a technical study that assumes prices move in repetitive wave patterns.
The idea states that price trends evolve in five stages, with waves 1, 3, and 5 serving as “impulse waves” that indicate the primary trend. Retracements between impulsive price movement occur in waves two and four.
According to Thielen, btc has begun its fifth final impulsive leg of its uptrend, aiming to reach $52,000 by mid-March, after completing its wave 4 retracement and correcting to $38,500.
Featured image from Adobe Stock, TradingView chart
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