After recently reaching their highest values in months, Bitcoin and other cryptocurrencies fell Tuesday. Analysts are still expecting Bitcoin to go up, but the recent crypto boom shows signs of slowing. Since trading above $25,000 not long ago, Bitcoin has seen a price drop of less than 1% in the previous 24 hours, down to $24,650.
Digital assets and stocks have been linked during the past year due to the challenging macro backdrop of rampant inflation and higher borrowing costs, but the most recent crypto market rally has far surpassed anything witnessed in the stock market. This is the lowest price at which the biggest online asset has continuously changed hands since June of last year.
In spite of the fact that Bitcoin will continue to follow stock market trends, cryptocurrencies have recently shown some divergence from the Dow and S&P 500. Bitcoin’s surge has been driven by forces internal to the cryptocurrency sector, such as strategic positioning in futures markets and technical factors that have been pushing prices higher. Bitcoin’s price has risen by almost 50% this year thanks to the recent rebound, bringing digital assets out of a terrible bear market and off multi-year lows, but it’s still down significantly from its late 2020 highs, when it was near $69,000.
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In recent times, Bitcoin has seen significant growth that is entirely separate from the rest of the cryptocurrency sector. Since the cryptocurrency has been steadily losing value relative to BTC for weeks, this appears like a very faraway event for the time being. Rate of growth of Ethereum relative to Bitcoin is likely to have a major, if not decisive, impact on the direction of market trends in the near future.
One analyst, however, is keeping in mind the possibility that Bitcoin will soon experience a significant uptick. The infusion of fresh vitality into altcoins could be achieved in this way. Many altcoins have seen significant losses as BTC has been on a rally, casting doubt on the possibility of a “altseason” while BTC continues to rise.
Analysts at crypto exchange Bitfinex noted in a note that “massive short liquidations propelled the surge” to Bitcoin at $25,000. If prices start to rise, the procedure may set off a chain reaction of buy orders. A rally that is fueled by short liquidations is indicative of gains driven by technical, rather than fundamental, considerations.
The Bitfinex researchers have also observed a shift in positioning in the crypto options market, where nearly equal value is being placed on put and call options (bets that prices will fall or rise, respectively). They were referencing the mechanics of the Bitcoin futures market, the most liquid in the cryptocurrency industry. In the event of a price increase, brokers might “liquidate” short positions, which are wagers against Bitcoin made using borrowed funds.
It appears likely that any form of drop will get short-lived, given the recent appetite and attitude surrounding Bitcoin. In 2020, the largest cryptocurrency by market capitalization saw its historic rise, rising by more over 300%. Financial Institutions Are Responsible for Most of Bitcoin’s Recent Price Increase.
The cryptocurrency, which has been around since 2009, is praised by its supporters for being a decentralised digital money that is not subject to the control of a single entity, such as a central bank. In light of the uncertainty surrounding the government’s stimulus measures to combat the Covid-19 outbreak, crypto bulls now view bitcoin as an inflation hedge on par with gold.
Bitcoin Continues Its Uptrend and Hits New Highs
While this is being written, the price of one Bitcoin is $25,650, an increase of just over 3% from earlier in the day. Whether or not cryptocurrency prices find sustained resistance at $26,000 will likely determine the next major trend. It’s possible that the price will keep rising every day now that it’s entering a rate-exploration phase. This is a significant increase from its daily lows of $24,000, which were set the other day early in the morning.
There has been an uptick in institutional investors’ enthusiasm for cryptocurrencies, and many have begun committing a portion of their portfolios to cryptocurrency investments. Due to an increase in the number of institutional investors who are willing to accept digital currencies, the value of the cryptocurrency has risen by more than 300% in the past year. Bitpanda’s CEO, Eric Demuth, has stated that bitcoin has repeatedly shown itself to be a high-performing and well-established asset.