Bitcoin: Correction over, a rally to the highs?
On Monday, Bitcoin fell below $50,000. That event seems like a long time ago now. The "queen" of coins has come back to over $60,000 in just four days. Some experts think that this quick rise shows how volatile the crypto market really is and creates opportunities for bulls, pointing to a possible major rally.
After a big drop in value that caused Bitcoin to lose almost 30% of its value, technical signs are getting stronger. In fact, the most popular cryptocurrency has already gained 26% since its low point around $50,000, breaking through short-term barriers.
This is not the first time that bitcoin has gone up in value. In 2016, when BTC was cut in half, there was a similar drop before a soaring bull market that took the cryptocurrency to all-time highs.
In this case too, the conditions look good for a new rise. The moving averages and the RSI (Relative Strength Index) behave in a way that suggests a rebound is likely.
Some analysts, like Peter Brandt, think that the recent drop was just what was needed to get rid of the weak hands before a big jump to new highs.
Some say that the recent drop in bitcoin's value was caused by technical issues, while others say that the yen carry trade is to blame. Simply put, investors who had drawn yen at low interest rates to put their money into assets that would make them more money had to sell their holdings all of a sudden.
All markets, including crypto, were hit by this huge sell-off, which made prices drop quickly.
When asked, "Does bitcoin really have value?," Chief Investment Officer at Bitwise Matt Hougan stresses that this sale has not truly changed anything about bitcoin. He thinks that this drop has more to do with an immediate need for cash than with a change in the long-term trend.
"Bitcoin has just been caught in the storm," says Hougan. "But the fundamentals remain strong."
The world market has gone through a huge liquidation;
The carry trade that sent the yen and the Swiss franc to all-time highs sped up market moves.
Bitcoin and the crypto market haven't changed in important ways.
Now that Bitcoin has gone above $60,000, everyone wants to know how much higher it could go. There are some very optimistic technical experts who think the price will go up to $100,000 or even $300,000. Someone thought that Bitcoin at $100,000 was a crazy bet before the US elections.
This could happen if present signs of strength keep showing up, like the RSI getting better and staying above important moving averages.
But it's important to remember that crypto markets are typically hard to predict. Still, the way the market is set up right now and the fact that investors are becoming more confident point to a new wave of buying.
Some people are so positive that they think it's the start of a cycle like the one that happened in 2017 after bitcoin's value was cut in half. The rise in Bitcoin since it was cut in half is like a broken dream, though.