This year, Bitcoin and other cryptocurrencies have continued to outperform the market. The price of the currency has moved from about $3500 to above the $9000 level. Other currencies like Litecoin, which is close to the halving has gained by more than 300%. There are two main reasons why the rally has continued.
First, based on the technical indicators, Bitcoin was oversold as the year started. This is because it has dropped from above $18000 to below $4000. All the technical indicators at the time such as RSI and Commodities Channel Index were deep in the oversold level. When an asset is trading at the oversold territory, there are many investors who buy them hoping that they will recover.
Second, there appears to be institutional interests in the currencies. A recent report showed that E*Trade, the large broker in the US is preparing for cryptocurrencies trades in its platform. Fidelity has started crypto custodian services while AT&T now lets its customers pay their bills using digital tokens. With this announcement, the company became the first carrier to do so. Facebook is currently working on its cryptocurrency, that will be used in money transfer. Last week, the project received the backing of large institutions like Visa, Mastercard, and Uber. The currency, known as Lira, will be unveiled this week ahead of the main launch in the coming year.
While the developments are welcome, they reveal an interesting reality. Only a very few people are using the Bitcoin to make transactions. Indeed, merchant cryptocurrencies use is just 1.3% of the total economic activity. Many people who own the currencies do so because of the value that comes from the investment. Therefore, while the gains might continue, it is difficult to predict its future. For example, while Facebook’s entry into the crypto world is welcome, it is difficult to see how that impacts Bitcoin.
As of this writing, the price of Bitcoin has moved to above $9000. On the annual chart below, the RSI has moved from 45 to almost the overbought level of 70 while the price is above the 14-day and 28-day EMA. The pair will likely continue moving higher to test the important resistance level of $10,000.
This year, Bitcoin and other
cryptocurrencies have continued to outperform the market. The price of the
currency has moved from about $3500 to above the $9000 level. Other currencies
like Litecoin, which is close to the halving has gained by more than 300%.
There are two main reasons why the rally has continued.
First, based on the technical
indicators, Bitcoin was oversold as the year started. This is because it has
dropped from above $18000 to below $4000. All the technical indicators at the
time such as RSI and Commodities Channel Index were deep in the oversold level.
When an asset is trading at the oversold territory, there are many investors
who buy them hoping that they will recover.
Second, there appears to be
institutional interests in the currencies. A recent report showed that E*Trade,
the large broker in the US is preparing for cryptocurrencies trades in its
platform. Fidelity has started crypto custodian services while AT&T now
lets its customers pay their bills using digital tokens. With this
announcement, the company became the first carrier to do so. Facebook is
currently working on its cryptocurrency, that will be used in money transfer.
Last week, the project received the backing of large institutions like Visa,
Mastercard, and Uber. The currency, known as Lira, will be unveiled this week
ahead of the main launch in the coming year.
While the
developments are welcome, they reveal an interesting reality. Only a very few
people are using the Bitcoin to make transactions. Indeed, merchant cryptocurrencies
use is just 1.3% of the total economic activity. Many people who own the
currencies do so because of the value that comes from the investment.
Therefore, while the gains might continue, it is difficult to predict its
future. For example, while Facebook’s entry into the crypto world is welcome,
it is difficult to see how that impacts Bitcoin.
As of this
writing, the price of Bitcoin has moved to above $9000. On the annual chart
below, the RSI has moved from 45 to almost the overbought level of 70 while the
price is above the 14-day and 28-day EMA. The pair will likely continue moving
higher to test the important resistance level of $10,000.
The post Why Bitcoin Could Possibly Head To $10,000 appeared first on Forex.Info.
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