The price of Bitcoin has been up and down in a pretty tight range over the past few weeks, but there is growing evidence both internally and externally that the price of the coin could be destined for bigger things.
Bitcoin is currently above $11,600, and has grown a few hundred dollars as the week has begun, but while the coin has not looked like dropping below $11,000 it has not really pushed for $12,000, although that could change this week, or at least set the price up for a bigger rally in the coming weeks.
Some of the reasons that could move the price of Bitcoin include external happenings like the US presidential race hotting up and the impending second round of US stimulus cheques. More so, Europe is also at the centre of economic moves as the central bank has hinted at more intervention.
Internally, Bitcoin fundamentals are looking good and pushing for new all time highs while analysts are also optimistic as they eye the $12,000 mark and beyond which would be a major rally.
More monetary policies
While Bitcoin has not quite proven itself to be a hedge against the global economy and the pressure being seen there, it has shown that weakening economies prompt price rises. Bitcoin is still quite correlated to market movement, but the US stimulus and European CEntral Bank policies could push the price higher.
“The dollar’s strength remains on the radar of Bitcoiners thanks to the inverse correlation between BTC/USD and the U.S. dollar currency index (DXY). Despite this correlation becoming less apparent in recent weeks, a sudden weakening of USD has the potential to be a boon for the largest cryptocurrency,” Cointelegraph explained.
Speaking to French newspaper Le Monde, ECB president Christine Lagarde said that more financial tools were left to be deployed to support the eurozone if necessary. In addition, the ECB’s $878 billion recovery fund should become a permanent feature.
The bank’s Coronavirus stimulus program amounted to €1.5 trillion in asset purchases.
“The options in our toolbox have not been exhausted,” she said. “If more has to be done, we will do more. On taking up my position, I was told that there was nothing left for me to do, that everything had been done. But that was clearly not the case!”
One area that remains on the radar of traders is the fundamental health of Bitcoin and its mining ecosystem. This has been bolstered as the mining difficulty is now back at all-time highs.
The latest readjustment saw difficulty increase by a larger-than-expected 3.5%. At the same time, the hash rate also climbed to a new average all-time high. The estimated computing power dedicated to mining stands at 146 exahashes per second (EH/s).
In its latest market reading, the Crypto Fear & Greed Index is back in “greed” territory, having edged up from “neutral” over the past week.
This suggests that sentiment among Bitcoin investors is anticipating a bullish advance, but there’s a caveat — if price increases too fast, “greed” will become “extreme greed,” under which circumstances the Index says a correction is much more likely.