What fueled the Bitcoin rally after it fell below $ 30,000?

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Jack Dorsey recently said cryptocurrency will be a “big part of the future of the business.”

To say that Bitcoin has had a turbulent year so far would be an understatement. From record highs to rapid drops, the cryptocurrency has seen it all in the first eight months of 2021. To put things in perspective, in January 2021, Bitcoin found itself around the $ 37,000 mark, reaching a record high of over $ 65,000 which it recorded in April. But that high was not sustained as it fell below $ 30,000 in May. Despite the fall, if we compare the value of Bitcoin for the same period in 2020, the jump in value is almost unprecedented. Worth $ 6,640 in April 2020, Bitcoin managed to deliver a return of over 800% to investors in fiscal year 2020-21 alone.

After several worrying weeks of a downward trajectory taking it below the $ 30,000 mark, the cryptocurrency showed signs of recovery when it hit a six-week high of $ 40,501.70 at the start of this week. On Monday, it hit its highest level since mid-June, registering a 9% jump from its value on Sunday.

Favor of the big names

After ditching Bitcoin for Dogecoin, citing the environmental impact, Tesla and SpaceX founder Elon Musk recently hinted at renewed interest in Bitcoin. The entrepreneur said he and the SpaceX company hold bitcoins. Likewise, Twitter CEO Jack Dorsey said cryptocurrency will be “a big part of the future of the business.”

Investors were also emboldened by a tender from Amazon in which the company mentioned that it needed a candidate for the role of product manager for digital currency and blockchain. This has led to rumors that the e-commerce giant may soon start accepting bitcoin for payment, which the company has denied.

Short positions

Short hedging is the process by which investors who operate under the assumption that bitcoin prices would continue to decline liquidate their positions. This could be one reason for the rally, given that nearly $ 800 million in BTC short positions were liquidated on the evening of August 8 alone.

In addition to Bitcoin, Dash, Ether and Litecoin also rallied during the week after a decline, to an average of at least 3%. However, while Bitcoin saw a slight dip on August 12, all eyes are on the market for how the next few days will unfold.

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