Bitcoin prices have been stuck trading near $50,000 after their latest upward movement. (Photo by ... [+] INA FASSBENDER / AFP) (Photo by INA FASSBENDER/AFP via Getty Images)
Bitcoin prices have risen to multi-month highs today, reaching their highest level since May, before bouncing within a very narrow range.
According to CoinDesk data, the world's most popular digital currency soared to $50,352.00 about 3 a.m. EDT.
Additional CoinDesk data showed that it reached $50,374.97 about 10 a.m. EDT.
The cryptocurrency was trading at its highest level since May 15 at this time.
Following the recent price movements, various analysts provided reasons for what prompted the increase as well as predictions for what bitcoin prices would do next.
[Editor's note: Investing in cryptocoins or tokens is extremely risky, and the market is mainly unregulated.] Anyone thinking about it should be aware that they could lose their entire investment.]
‘Plenty’ Of Potentially Bullish Factors
“Unlike equities, which are driven by fundamentals, cryptos are solely market driven,” said Anthony Denier, CEO of trading platform Webull Financial.
He stated, "There is plenty of news, market dynamics, and investor enthusiasm to trigger a surge."
“The fact that El Salvador aims to use Bitcoin as its national currency as soon as next week is likely boosting investor confidence. However, other reasons appear to be driving the bitcoin market surge as a whole.”
He cited the strength of other notable digital currencies, namely Cardano's ada and ether, as potential sources of growth for the broader crypto industry.
Other commentators pointed to a variety of factors as possible contributors to bitcoin's recent uptick, with Charlie Silver, CEO Chairman of Permission.io, underlining the role of central bank money production.
“The rise is being driven by the realisation that the US Federal Reserve and other central banks across the world have no intention of slowing down their asset purchase programmes,” he said.
“Institutions see the need for non-dollar denominated assets to provide security, and Bitcoin is ideal for this.”
On-Chain Data
Information taken from the blockchain, according to some analysts, helped build a positive image for bitcoin.
According to Sean Rooney, head of research at Valkyrie Investments, “on-chain data reveals that whales and long-term investors of various sizes have been accumulating in the area of $46,000 to $50,000.”
“The sustained accumulation over the previous 6 weeks has led to the BTC balance on exchanges flirting with multi-year lows,” he said.
Scott Melker, the presenter of The Wolf Of All Streets Podcast and a crypto investor and analyst, also added his two cents.
“On-chain measurements show that coins are being moved en masse off of exchanges and into cold storage, with only a few significant players selling,” he said.
“Since the year 30K, huge wallets have been aggressively accumulating Bitcoin. The decrease below $30K was compounded by the system's high leverage, so the price fell considerably more than it would have in a vacuum,” Melker explained.
“Price has now returned to its original level.”
Fragile Sentiment
It appears that the digital currency is currently benefiting from a "perfect storm" of favourable occurrences.
Denier, on the other hand, cautioned that the situation may swiftly alter.
“Bitcoin's recovery above $50,000 indicates that investors are once again bullish on cryptocurrencies; however, whether this trend continues will be determined by a robust advance above $50,000. With news and new information as the market's primary drivers, any negative news might send it tumbling,” he said.
Technical Analysis
Some market watchers chimed in on bitcoin's major levels of resistance and support, in addition to throwing some insight on the myriad causes that may have caused the digital currency's recent price fluctuations.
“After 12 days of consolidation, Bitcoin is showing momentum heading into the US session,” said Mark Warner, head of trading at BCB Group.
“If not today, then in the very near future, we predict a decisive break through $50k, with $50k becoming a support level.”
StockCharts.com's top market strategist, David Keller, also shared his thoughts.
He explained that Bitcoin has a history of finding support and resistance at large round figures.
“At this point, Bitcoin is testing the $50,000 resistance level, and we've witnessed a number of failed attempts to break through this barrier. The good news for Bitcoin bulls is that if we break above $50K and continue to the upside, there will be very little technical resistance until the upper $50s,” Keller said.
He also discussed the potential levels of the digital currency if it reverts.
“On the downside, the 200-day moving average, as well as previous swing lows, all in the $46,100-$46,600 zone, provide price support,” Keller added.
“Above these levels, the chart continues positive. Investors should expect more support at prior lows around $44K if Bitcoin breaks lower.”
I own bitcoin, bitcoin cash, litecoin, ether, and EOS, among other cryptocurrencies.