As the world continues to battle the economic crisis brought about by the Coronavirus outbreak, Bitcoin (BTC) seems to be making good progress as it is back above $7000. The flagship crypto had been flat-lining between $6400 – $6800 regions for days as the bulls struggled to break past the resistance at $6800. Now it looks like the bulls are finally back in control as BTC has been in an upward rally pushing past $7400 at one point.
The price of BTC has almost doubled in less than a month’s time from $3600 following the March 13 drop, to its current price of $7297. According to analysts, there were several factors at play behind the rally, with one being the massive surge in buy volume on spot exchanges paired with the decline of open interest on major futures exchanges.
The futures market often tends to cause high volatility in the market due to all the leverage trading. The shift in the market towards spot exchanges have helped stabilize the price of BTC, letting the price recover with any major corrections.
COVID-19 & Halving to boost Bitcoin
The upcoming BTC halving that is set to slash mining rewards to half, is also expected to push the cryptocurrency’s price towards $10,000 according to Bobby Lee, Crypto exchange founder, Ballet crypto wallet company CEO and founder, and member of the Bitcoin foundation’s board of directors.
In a statement to media outlet Cointelegraph, Lee claims that with the BTC halving a month away and as seen during previous halvings, upward price action is expected as per the theory of supply and demand. He noted:
“When new supply is cut in half and demand stays the same or increases, a price increase is a certainty. An increase of 25% to 50% by the third halving in May is a very modest expectation.”
Furthermore, he added that the current global economic condition and the rising inflation rate of fiat currencies will fuel BTC’s upward rally. He added:
“As a greater amount of fiat money chases a limited amount of goods and services, a significant increase in inflation is inevitable, which will cause prudent investors to turn to Bitcoin as a safe haven to preserve their purchasing power.”
In another interview, Billionaire and Bitcoin advocate Tim Draper voiced a similar opinion stating that the on-going pandemic would see people turning towards BTC especially as billions in fiat is being printed by central banks.
“This is going to be a really interesting time where people say ‘well, why don’t I just use Bitcoin?’ I know there are only 21 million of them and we don’t have to worry about whether a government is diluting their currency by printing tons of it, we can instead just use a currency we all agree on and it’s all a part of the economy and it’s already frictionless and open and transparent and global.”
The Bitcoin chart has formed an ascending channel over the past week. The Relative Strength Index (RSI) is hinting that there is increased buying activity along with the 50 SMA and the 100 SMA pointing towards the same. It is quite evident that the selling pressure has reduced significantly and the buyers are in control.
As of now, $8,000 is the next key level for the bulls to reclaim before the market can be called a bull market. According to analysts, if BTC breaks past $7300, the next stop for BTC is near the $7700 region. With the upcoming halving, and people turning towards BTC to shield them from the crisis, $8000 shouldn’t be too hard to reach.