Speculation about the current upturn is endless, as Bitcoin is now stable news even in the regular press. But what is causing bitcoin prices to go up? Is it just the amount of good news, or are there indicators in the chain that can predict future price movements?
After testing the $ 50,000 barrier in early March, the bitcoin (BTC) price has remained steady above this level. Even the decline in the last week of March could not continue as the bulls pushed the price up to a new full-time high of around $ 65,000.
The argument that good news promotes a market recovery is an obvious argument simply because it can not be denied that we have seen any kind of FOMO snowball effect among organizations in recent months.
The rally started in the last quarter of 2020, and the fact that prices rose suddenly in October, can not be ignored among news that PayPal has entered the cryptocurrency area. Further bullish moves followed when JPMorgan launched the long-awaited currency JPM.
MicroStrategy launched a massive buying activity this year, with Tesla approving an investment of $ 1.5 billion. Major banks, including Goldman Sachs and Citigroup, which have expanded their services to include cryptocurrencies, have added more credibility to the argument that cryptocurrencies are taking their place as a class of fixed assets. More recently, the hype surrounding the listing of Coinbase on the Nasdaq exchange – the first in the cryptocurrency industry – has also played a role in ensuring that digital assets remain on the global news agenda.
At the macro level, the ongoing pressure to get a Bitcoin ETF approved by US regulators also gives a more optimistic feeling. – Although the analyst believes that it may take another two years before the approval is received.
Was $ 25,000 an institutional price trigger?
Although the theory that good news supports bitcoin prices cannot in itself lead to a long-term rally, the market movement was clear enough to make large investors and institutions relax and notice. An eToroX report released in January states that researched institutional actors seem to agree with this idea.
The report says that BTC must reach a high enough price to make it attractive to companies when balancing against other barriers to entry, such as regulatory risk, potential fraud and access to important infrastructure. One respondent even went so far as to set a price cap of $ 25,000, indicating that current prices are more than enough to attract institutional investors.
KuCoin chief Johnny Liu believes that underlying concerns about the health of the wider markets play a role in the institutional adoption of cryptocurrency, telling the Cointelegraph: “The recent rally is linked to fears of long-term quantitative easing and global inflation.” He also took a look from the inside and said: “Trading behavior on KuCoin shows that Western investors are more involved in this round than their Asian counterparts.
The reason here is that western countries have been less able to cope with the spread of COVID-19, which has resulted in increased public spending and greater economic impact. However, Robbie Liu, a market analyst at OKEx Insights, noted that the interest from Asian investors is still lingering. He explained that the pursuit of a stable currency is a bullish signal:
“In the Asian market, the US dollar has also shown a positive premium since March, which means that one dollar has traded above one dollar. This premium also reflects the strong demand for access to the cryptocurrency area. ”
When good news is not necessarily good news
The problem with the idea that prices are entirely driven by the positive emotions generated by headlines is that they do not create conditions for long-term price stability. Simply put, if good news runs out, prices can turn around, creating a snowball of bad news in a deteriorating market.
From this point of view, it is worth examining some of the basic factors, both in the chain and outside the chain, that can affect prices. There are many reasons to be positive here. However, there are basic factors that indicate that the upside to 2021 is far from over. Glass node data show that the volume of BTC stored at the centers is constantly decreasing, which reduces the fluid flow.
However, the number of games with over 1000 BTC recently hit record highs, indicating that more and more whales are being hunted. Miners have also recently joined this trend and are accumulating more bitcoins than they are selling.