Bitcoin: Will this rally last?

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The price of bitcoin (BTC) has seen a good boost this month, climbing around forty percent since the start of the month. But that leaves open questions about the sustainability of this rise and whether or not bitcoin’s price will continue to rise from now on.

The price of bitcoin

The price of Bitcoin has yet to recover from its steep fall after hitting an all-time high of $68,904 in November 2021. The crash in cryptocurrency values ​​was prompted by a variety of factors, including political ultra-hawkish monetary policies of the Federal Reserve. and big failed cryptocurrency fraud schemes like Celsius. Nonetheless, the price of BTC saw a respectable rebound this month, rising from $16,263 at last month’s low to $23,324 high this month.

Why was there such a price jump?

It is imperative that I first discuss the fundamentals that are driving the current rally before I start discussing the resilience of the current rally. The Fed’s aggressive monetary policy was the main factor behind the steep drop in the price of bitcoin. The Federal Reserve has since changed its stance on monetary policy, moving from a very hawkish policy to a less aggressive one. For example, the Federal Reserve is almost certain to raise interest rates by just 25 basis points next month. This indicates that the Fed has changed its view despite inflation as it exits its peak.

The rally in risk is another factor that has contributed to bitcoin’s relative price stability. The price of Bitcoin has formed a significant positive correlation with the S&P 500 index, indicating that as the index rises, we also see an increase in the price of BTC. This suggests that Bitcoin’s value will continue to rise in the future as long as the risk rally continues.

Furthermore, there is a widely held opinion among traders and investors that Bitcoin prevailed despite disastrous events such as the collapse of FTX and the domino effect it triggered as a result. The Hodlers began to ponder the possibility that the crypto winter was over and we would emerge from this predicament unscathed.

Will the price of Bitcoin continue to rise?

Two critical aspects of this situation deserve particular attention. First, there is an influx of money that is invested for speculative purposes. Everyone is aware that cryptocurrency prices have taken a big hit, and if Bitcoin starts rising, chances are other cryptocurrencies will start rallying as well. It is highly likely that if the bitcoin price continues to rise, it will induce more FOMO, which implies that more speculative money will flow into the cryptocurrency industry. This has the potential to drive up the price of BTC.

Second, the dollar could weaken if the Fed starts to slow the process of raising interest rates, as expected. This has the potential to have two different effects on the price of bitcoin. One is the possibility that the risk rally will gain additional momentum, which would be beneficial for bitcoin. The other is that the decline in the value of the dollar index could also lead to an increase in the price of bitcoin.

From a technical standpoint, there is no doubt that the price of BTC is overbought, as shown by the RSI on a daily time frame. Any reading near or above 70 suggests that a price retracement is likely, while any reading near or below 30 indicates that the price of the asset has been significantly oversold.

For technical analysts, the $30,000 level is the most important resistance point for bitcoin price. If the price does not break above this resistance level, the bullish rally will be in danger. But if BTC breaks through this level and maintains its position above this price level, the likelihood that BTC’s price action will again attempt to retest its all-time high will increase significantly.

Conclusion

To sum up, bitcoin price has recently started to get more attention, but we are not out of the woods yet, and it won’t be until the price breaks through the 30,000 resistance level. $, then continued its ascent from that point on.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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